The Canadian dollar erased its losses versus the US dollar and the Japanese yen today, while advancing against the euro, on hopes that US politicians will reach an agreement about a way to avoid the fiscal cliff.
The time for automatic tax increases and spending cuts is near and that danger causes fear on markets. Many economists believe that so-called fiscal cliff will push the US economy into recession. The global economy is already suffering from economic decline in the eurozone and recession in another major economy may lead to a global crisis yet again.
President Barack Obama meets with Congress today to discuss measures to avoid the danger. Uncertainty about the outcome of the meeting was weakening riskier currencies, but now traders took more optimistic approach, looking for currencies with higher yield. The Canadian economic data was also supportive for the loonie as foreign investment in Canadian securities climbed to C$13.9 billion in September.
USD/CAD closed at the opening level of 1.0008 after rising to 1.0055 today. EUR/CAD dropped from 1.2791 to 1.2746. CAD/JPY advanced from 81.05 to 81.13, following the drop to 80.73.
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