Loonies Decline Halted on Fed Comments, Oil Rebound

The Canadian dollar had a disappointing start this week as a combination of global pessimism and optimism exclusively to the U.S. economy declined appeal for currencies tied to growth, but today the loonie ended its losing trend on more favorable news for its currency outlook.

The main driver behind the halt on the the CAD losing streak was a comment made by Federal Reserve Chairman Ben Bernanke affirming that the U.S. economy still needs low interest rates for an extended period to sustain its recovery, declining appeal for the greenback as it was much related to speculations suggesting that rates would be hiked in the second semester of 2010. A part from Fed comments that reflected positively for the Canadian dollar, the crude oil also reverted a negative trend as risk aversion had a slight decline on the global scale today, allowing Canada’s commodity export to boost attractiveness for its currency.

The Canadian dollar is still under the influence of different comments and news showing alternated indications of pessimism and optimism in the global economy, which is likely to still bring a good amount of volatility for the loonie.

USD/CAD traded at 1.0544 as of 21:25 GMT from as high as 1.0592 earlier. CAD/JPY traded at 85.47 from as low as 84.98.

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