The Canadian dollar fell versus the US dollar and the Japanese yen yesterday and kept its losses today amid fears of the fiscal cliff in the United States. Earlier, the currency advanced on the positive market sentiment. The loonie remained strong against the euro.
US politicians are unable to come to an agreement and that means automatic tax increases and spending reductions may be initiated, threatening the US recovery. The resulting fears hurt Canada’s major export — crude oil, which fell 0.5 percent to $87.34 per barrel in New York. The Standard & Poorâs 500 Index dropped 0.5 percent, erasing the earlier gain.
The traders’ mood was positive initially as the US macroeconomic data was favorable. The agreement about a bailout for Greece added to investors’ confidence. Yet later market participants turned their attention to the unresolved problems of the global economy, reducing their willingness to buy risky currencies.
USD/CAD traded at 0.9942 as of 1:28 GMT today after dropped from 0.9932 to 0.9904 and closed at 0.9943 yesterday. CAD/JPY rallied from 82.60 to 82.98 before closing at 82.56 yesterday and dropped to 82.43 today. EUR/CAD declined from 1.2870 to 1.2856.
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