Very good employment data from the United States fueled the strength of the US currency but it also led to massive gains of the Canadian dollar yesterday, which the loonie managed to maintain today.
Recently, it was usual for positive data from the USA to boost greenback and drive riskier commodity currencies down. Yet the loonie is in a different position that most other currencies as the United States are the major trading partner of Canada, meaning that the same news that is good for the US currency is also positive for the Canadian one. The reason for this is simple: growth of the US economy means better prospects for Canadian exports.
Indeed, the latest trade data from Canada supported such view. Canada’s trade deficit narrowed from C$961 million in April to C$152 million in May.
USD/CAD dropped from 1.0664 to 1.0634 yesterday and traded near this level as of 2:16 GMT today. EUR/CAD traded at about 1.4467 after tumbling from 1.4564 to 1.4471 and reaching 1.4446 — the lowest price since January 6. CAD/JPY jumped from 95.40 to 96.09 and touched 96.23 (the highest since January 10).
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