Europe’s debt story continues to eat away investor’s confidence and, as a result, the Canadian currency continues to suffer. The euro feels even worse, though, and the Canadian dollar reached the highest level in almost two years against the shared European currency.
Europe is not going to leave the news headlines anytime soon and every time traders hear about new developments in the European credit story they seek refuge as that developments rarely are good. Today’s trading session was no different as the faltering Spanish banking system fueled investors’ fears that were already strong because of Greece. The Standard & Poor’s 500 Index dropped 1.4 percent today. July futures for delivery of crude oil were down as much as 3.9 percent to $87.27 per barrel on NYMEX, the lowest level since October.
The loonie definitely felt the negative influence of traders’ uncertainty as it was heading to a 4.2 percent drop in May. Implied volatility for one-month options on the Canadian currency against the US dollar reached the highest level since January. There is some hope for the loonie, despite all the negative factors, as analysts expect positive macroeconomic data from Canada and the United States later this week.
USD/CAD jumped from 1.0222 to 1.0300 as of 23:01 GMT today. CAD/JPY slumped from 77.73 to 76.73, touching 76.46 intraday — the lowest rate since February 3. Meanwhile, EUR/CAD dropped from 1.2776 to 1.2735 and its daily low of 1.2726 was the lowest since June 2010.
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