This week was marked by ever-changing sentiment as US politicians were making different remarks regarding talks about avoiding the fiscal cliff. As a result, the Canadian dollar ended the week near its opening level against the US dollar and the Japanese yen because losses and gains balanced each other. The euro outperformed the loonie this week.
US politicians were making various comments that sometimes contradicted each other. It looked like they were throwing different ideas at the market and watched the reaction. For the most part the response of market participants was positive. Europe has left the forefront of news, but the outlook for the region was slowly improving. That helped the Canadian dollar to gain on safer currencies, but made it weaker versus the euro at the same time.
The domestic fundamentals were not supportive for the Canadian currency. Canada’s economy did not grow in September from the prior month and the current account deficit rose C$0.5 billion to C$18.9 billion in the third quarter of this year. The loonie was also hurt by the surprise announcement that Bank of Canada Governor Mark Carney will succeed Mervyn King as Bank of England’s head in June.
USD/CAD closed at 0.9933 after opening at 0.9921 and rising to 0.9959 this week. CAD/JPY rebounded after the drop from 82.86 to the weekly low of 82.00 and closed at 82.93. EUR/CAD went higher from 1.2868 to 1.2917 over the week.
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