Crude Oil, European Confidence Push Loonie Up

The Canadian currency benefited from a risk driven session today after commodities and stocks climbed considerably on renewed market confidence since concerns regarding Greece’s budget deficit cooled down in Europe, decreasing risk aversion globally.

After concerns in the Eurozone cooled down since Greece stated it will implement all necessary measures to tighten its budget deficit and avoid a bailout from the IMF, financial markets rose globally, specially those with high influence on the loonie’s rates, as its the case for the crude oil, the main Canadian commodity export. In the domestic scenario, a positive report was published today in Canada showing that manufacturing sales jumped last December, even if they showed figures slightly below forecasts, it was a considerable improvement from November’s figures, when they had almost stalled in the monthly comparison.

An increased market confidence allowing traders to seek riskier assets is fueling the loonie’s rally today, specially versus its U.S. counterpart, but the fiscal crisis in Europe is far from ending, and more weeks of high volatility are likely to come based on this uncertainty scenario.

USD/CAD traded at 1.0425 as of 17:15 GMT from a previous rate 1.0485. CAD/JPY traded at 86.58 from 85.71.

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