Canadian Currency Tumbles on Risk Aversion

The Canadian currency, which started the week rallying majorly versus its U.S. counterpart, was one of the worst performers today as commodities and stocks faltered, influencing negatively the outlook for the loonie and other currencies from commodity exporter nations.

The Canadian dollar didn’t manage to extend yesterday’s gains since risk aversion rose once again in foreign-exchange markets as U.S. gross domestic product figures had a less significant increase than figures from the past quarter, declining risk appetite and forcing Canada’s main commodity export, the crude oil, down globally, affecting other currencies linked to the “black gold” as the Australian dollar and the Norwegian krone. The Canadian currency has been experiencing high volatility during the past weeks as risk levels among traders is changing overnight, as reports worldwide sometimes bring optimism with economic recovery figures at the same time that growth forecasts and interest rates outlook remain rather dovish in most of the wealthy nations around the world.

The volatility of the crude oil is playing a massive role in the Canadian dollar trends this week, as the Bank of Canada seemed to “cool down” on its statements regarding the loonie’s strong rates. Commodities rates will be they key-factor determining the loonie’s direction towards the end of the year.

USD/CAD traded at 1.0605 from 1.0555 in the intraday comparison. CAD/JPY fell to 83.47 from 84.37.

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