This week is being one of the most negative for the Canadian currency in months, as stocks and commodities declined significantly, and considering the loonie one of the most influenced currencies by these movements, today’s drop set the Canadian currency to the lowest level in 3 weeks versus the greenback.
The Canadian dollar posted a decline versus more than half of 16 main traded currencies today as stocks and commodities faltered once again around the world as risk aversion rose after a U.S. home sales report that indicated an unexpected fall in its monthly figures for September, affecting the higher-yielding Canadian dollar profile as traders return to the safety of its U.S. counterpart. A part from volatility in financial markets, the Canadian dollar has been affected by a downturn in its sentiment as the Bank of Canada has been repeatedly affirming that a strong currency is unwanted for the economic moment the nation is passing through, as its economy need to recover, and a weaker currency can promote this process more quickly.
The sentiment regarding the Canadian currency suffered a huge shift after the national central bank started to stress on the fact that a strong rally for the loonie would be halted by policy makers, shunning risk seeking investors from assets in Canada towards commodity linked currencies in other global economic regions, which set the loonie to the worst rate in weeks this Wednesday.
USD/CAD traded 1.0782 as of 19:14 GMT from a previous rate of 1.0636 yesterday. CAD/JPY fell to 84.11 from 86.23.
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