The Canadian dollar was rallying for a third week against the US dollar and the Japanese yen on a back of surging commodity prices. Commodities jumped after the US Federal Reserve announced its intention to keep interest rates low for a prolonged time, leading to weakness of the US currency. The currency was down against the euro for the second week.
The most positive event for the Canadian currency this week was the pledge of the Fed to keep rates low till at least late 2014. The US dollar fell and that resulted in a commodity rally that was positive for the loonie, which is a commodity currency. There were some negative factors, especially in the second half of the week. The most important among them were growing concerns about an outcome of the talks between Greece and bondholders and negative data from the United States, including lower-than-expected GDP growth.
The influence of the fundamentals was most obvious in the performance of Canada’s currency against the yen. CAD was rising against JPY for the most part of the week, but was falling in the last two days before the weekend. The impact of macroeconomic data was less evident in the performance of the loonie versus the euro and the greenback as CAD was rising against USD and falling versus EUR virtually for the whole week.
USD/CAD was down from 1.0140 to 1.0014, while CAD/JPY rose from 75.78 to 76.44 this week. EUR/CAD was up from 1.3061 to 1.3239 over the week.
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