The Canadian dollar was among many losers that have suffered from the negative sentiment on the Forex market after the US Federal Reserve speculated about possible reduction of asset purchases. The currency fell to almost two-year low against the US dollar.
The market is still feeling impact of the Fed’s comments even as some politicians and economist argued that the reaction was excessive. Prices for raw materials dropped adding to suffering of commodity related currencies. All in all, traders remain fearful and unwilling to take risks.
Some higher-yielding currencies paused their drop on Monday, but the loonie remained soft. Monetary stimulus usually weakens currency, therefore prospects for less stimulating policy in the United States made greenback stronger and will likely continue to help the US currency this week, sapping the strength of the Canadian one at the same time.
USD/CAD rose from 1.0497 to 1.0511 as of 3:17 GMT today after touching 1.0554 yesterday — the strongest rate since October 2011. EUR/CAD went up from 1.3772 to 1.3791 following yesterday’s advance to 1.3814 — the highest since November 2011. CAD/JPY was at 92.86, near the opening of 93.04.
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