Market Optimism Makes Loonie Stronger

The Canadian dollar gained, rising to the highest level in more than a week against the greenback, as stocks and commodities rallied, making the growth-linked currency appealing to investors.

Federal Reserve Chairman Ben S. Bernanke spurred optimism on markets last Friday and it still persists. The Standard & Poor’s 500 index rose as much 2.8 percent. October futures for delivery of crude oil (main export of Canada) gained 2.5 percent to $87.52 per barrel in New York.

Sentiment across markets became even better as the report showed that personal spending in the US, the main trading partner of Canada, increased 0.8 percent in July, compared to the median forecast of 0.5 percent and the decline by 0.1 percent in June. The report later this week by Statistics Canada is expected to show growth of Canada’s gross domestic product by 0.2 percent in June, following the drop by 0.3 percent in May.

USD/CAD traded at 0.9764 today as of 1:18 GMT after it fell yesterday from 0.9795 to 0.9767, while touching 0.9738 during the day — the lowest level since August 4. EUR/CAD fell from 1.4203 to 1.4171 on the previous trading session and traded near 1.4167 today. CAD/JPY traded at about 78.66 after rising from 78.21 to 87.61.

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