US & Europe Drain Loonie’s Strength

The problems of Europe still plague markets and the unfavorable reports showed that the US manufacturing weakened. The resulting shift of markets to risk aversion mode was negative to the Canadian dollar.

The New York Manufacturing Index fell to -7.8 in June from 11.9 in May and the Philly Fed Manufacturing Index slid to -7.7 from 3.9, while market participants expected the manufacturing to improve this month. The Standard & Poor’s 500 Index was up less than 0.2 percent following the decline by 0.6 percent. The MSCI World Index of stocks slipped 0.8 percent.

Mark Carney, the Governor of the Bank of Canada, said that in the short-term the economic growth can remain subdued. But in the second half of the year the recovery should pick up momentum. The Governor also suggested that’ll be time to raise the interest rates. The positive outlook for Canada’s economy can potentially play in favor of the Canadian currency.

USD/CAD rose from 0.9789 to 0.9896 before trading at about 0.9816 as of 22:49 GMT today. EUR/CAD advanced to 1.3938 from 1.3880. CAD/JPY dropped to 82.05 from 82.64.

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