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Loonie Pares Losses on New Fiscal Cliff Hopes

November 29, 2012 at 14:30 by Miranda Marquit

A heap of Canadian dollar billsEarlier, fears about the United States going over a fiscal cliff sent the Canadian dollar lower. However, hopes are once again on the rise for an agreement to avoid the fiscal cliff, and that is helping the loonie regain some of its lost ground.

Concerns about the effect of the US fiscal cliff have done a great deal to put a damper on risk appetite lately, and that has included weighing on the Canadian dollar as Forex traders look for safe haven. Loonie is still lower against the US dollar, but it has pared some of its losses, and looking for strength, now that some of those concerns have dissipated and risk appetite is making an appearance.

There is hope for a budget deal in the United States, and that is positive for risk appetite, and for the Canadian dollar. Additionally, with the loonie considered a reserve currency as of next year, Canada has a chance to continue to prove its desirability, and its strength as an economy. All of this is likely to help the Canadian dollar as well.

Loonie is also finding support from slightly higher oil prices. With oil prices moving higher, the Canadian dollar is likely to get help from its major natural resource.

At 14:27 GMT USD/CAD is up to 0.9924 from the open at 0.9921, but down from the high touched at 0.9935. GBP/CAD is also higher at 1.5918, up from the open at 1.5888.

If you have any questions, comments or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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