After enjoying a solid performance earlier, the Canadian dollar is now heading much lower on a variety of economic concerns and a drop in commodities.
Loonie is headed lower today as the latest US economic data bodes ill for Canada’s largest trading partner. On top of that, there are concerns about the eurozone, and that is weighing on risk appetite in general. Cyprus is once again throwing a wrench into the workings of the eurozone, and there is more talk of euro exit. With risk appetite fading, high beta currencies like the Canadian dollar falter in Forex trading.
Also not helping the situation is a drop in commodities, particularly oil. With gold prices heading down toward $1,500 an ounce, and with oil prices dropping toward $90 a barrel, commodity currencies like the loonie are in a tough spot. Canadian dollar is particularly dependent on oil prices for support. The latest IEA report about lower demand for the rest of this year isn’t helping oil prices, and neither is the risk aversion.
For now, Canadian dollar is likely to struggle. There’s just too much uncertainty, and not a lot of news that’s positive for the loonie.
At 15:17 GMT USD/CAD is up to 1.0134 from the open at 1.0105. EUR/CAD is up to 1.3272 from the open at 1.3238. GBP/CAD is up to 1.5571 from the open at 1.5546.
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