The Canadian dollar failed to hold onto its earlier gains and dropped by the end of Monday’s trading session due to the rout of crude oil prices.
Canadian Dollar CAD
Central Bank: Bank of Canada
Public Debt to GDP Ratio, 2014: 92.6%
Trade Balance, 2014: $17 bln.
Inflation, 2014: 2%
Major commodity exporter
Factors of Weakness
Dependence on United States as a major counterparty
The Canadian dollar is the official currency of Canada and is the 7th most traded currency in the world. It is often nicknamed “loonie” for the image of the aquatic bird on $C1 coin. The loonie was introduced as a currency used in Canada and all of its provinces in 1871, while the fixed exchange rate was abandoned in 1970. It is used by some central banks as a reserve currency. The performance of the currency depends on raw materials. Prices for crude oil are the most influential factor on the value of Canada’s dollar as oil is the most important export of Canada.
Canadian Dollar News Archive
The latest Canadian data release, from the end of last week, hasn’t been doing much to help the loonie in Forex trading. Although the Canadian dollar is getting a bit of help against some of the high beta currencies like the pound and the euro, it is down against the dollar and the yen.
The Canadian dollar is getting help today from the fact that oil prices are on the rise. Concerns about oil have been weighing on the loonie, and while there is still some weakness likely ahead, for now the Canadian dollar has the upper hand.
The Canadian dollar was able to overcome the negative impact of falling prices for crude oil, bouncing from the daily lows during the Monday’s trading session.
Crude oil continued to rise over the Friday’s trading session, meaning that the Canadian dollar was rising as well. The loonie tends to show a strong correlation to moves of crude oil prices, and the correlation was especially noticeable during the recent time.
The Canadian dollar was tracking move of crude oil very closely in the recent past, and today’s trading session was no different. Prices for crude rallied, and the loonie followed them.
The Canadian dollar gained today, extending its rally versus the US dollar and the Japanese yen for the third straight session. The reason for the admirable performance was the surprise rally of crude oil.
The Canadian dollar rallied today after the Bank of Canada made a surprise decision to keep interest rates unchanged instead of cutting them as the majority of analysts had predicted. Earlier, the currency reached the lowest level in 12 years against the US dollar before bouncing higher.
The Canadian dollar was falling today, though the losses were relatively small. The major theme for the currency this week will be the monetary policy meeting scheduled by the Bank of Canada on Wednesday.