After firming a bit earlier on the Forex market, Canadian dollar is now falling back. With excitement over Spain fading, and with the boost from better economic data disappearing, the loonie is struggling against the US dollar.
Earlier, good news about Canada’s economy helped boost the loonie in Forex trading. The latest day showed that the Canadian economy grew 0.2 per cent between June and July. The increase was better than expected, and gave the loonie an edge against the greenback.
Also, the Canadian dollar was helped by the Spanish budget, which offers enough austerity that it should be eligible for an ESM bailout if it gets to that point. The news heartened markets in general, and boosted risk appetite enough to help the loonie.
Since then, though, a grimmer mood has descended on the markets. Canadian dollar is falling back against the US dollar as concerns about what Moody’s will decide about Spain weigh on risk appetite. Also, commodities are losing ground, and that is weighing on the loonie, since it is a commodity currency. The fact that oil prices have slipped into the red is especially discouraging for the Canadian dollar.
At 14:11 GMT, USD/CAD is up to 0.9835 from the open at 0.9805. EUR/CAD is up to 1.2665 from the open at 1.2664. GBP/CAD is lower at 1.5875 from the open at 1.5917.
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