The Canadian dollar reached parity with its US peer yesterday, but retreated today as negative macroeconomic data from the United States decreased willingness of Forex traders to buy riskier currencies.
The pledge of the US Federal Reserve to keep its interest rates exceptionally low till at least 2014 was supporting commodities yesterday. Commodities make up about a half of Canada’s export revenue. The Thomson Reuters/Jefferies CRB Index of commodities was up 0.3 percent yesterday.
Market mood was spoiled, though, as reports from the USA weren’t very good, especially increasing jobless claims and declining new home sales. The Canadian currency was particularly hurt by the poor US economic data as the United States is the major trading partner of Canada. Positive signs from the USA were a relief from the constant stream of bad news from Europe, but now traders are concerned that America may cease to support good sentiment on FX market and turn to yet another source of worries.
USD/CAD rose from 1.0020 to 1.0028 as of 7:44 GMT today, while yesterday it dropped as low as 0.9980 — the lowest level since November 1 (the last time the currency was at parity). EUR/CAD was up from 1.3124 to 1.3141, while CAD/JPY was down from 77.24 to 76.82.
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