The Canadian dollar rallied today as traders’ sentiment improved and risk appetite after Greek Prime Minister George Papandreou canceled the planned referendum about the austerity measures required to get the bailout.
Europe and its financial instability continue to rule the Forex market, but today FX traders have felt some relief. The referendum in Greece, offered by the Prime Minister, was a grave threat to the Eurozone as it could easily lead to expelling of Greece from the Eurozone. Fortunately, Greek politicians and EU leaders convinced Papandreou to give up its plans for a referendum, easing the already strained situation in the region. The unexpected decrease of the interest rates by the European Central Bank also improved prospect for the future of the EU economy.
Mark Carney, President of the Bank of Canada, was speaking yesterday before the Senate Committee on Banking, Trade and Commerce. He spoke about the economic slowdown in the US and China, while Europe will face a brief recession, according to his outlook. Carney’s outlook also can’t be called optimistic:
The outlook for the Canadian economy has weakened since July, with the significantly
less-favourable external environment affecting Canada through financial, confidence and trade channels. Although Canadian growth rebounded in the third quarter with the unwinding of temporary factors, underlying economic momentum has slowed and is expected to remain modest through the middle of next year.
USD/CAD fell from 1.0139 to 1.0076 today as of 21:44 GMT after rising to the daily high of 1.0214. EUR/CAD was at 1.3916 after opening at 1.3939 and slumping to 1.3824. CAD/JPY rose only a little yesterday, but the upward momentum of the currency pair strengthened and the move was more “bold” as the pair rose from 76.93 to 77.38 (while it was down to 76.34 intraday).
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