Loonie Rides Higher on Back of Commodities’ Rally

The Canadian dollar advanced today with help of rising commodity prices. Loonie’s performance is strongly correlated to moves of prices for raw materials.

Futures for crude oil, the major Canadian export, rose as much as 1.21 percent to $98.52 per barrel in New York today. Copper rose 0.26 percent to $3.2665 per pound. The Standard & Poor’s GSCI Index of 24 commodities added 0.8 percent.

Raw materials and other risky assets were rising due to risk appetite created by talks about a banking union in Europe and speculations that the Federal Reserve will delay its stimulus tapering. Strangely enough, the Japanese yen was being one of the biggest victors during today’s session despite being a safe currency.

USD/CAD was down from 1.0624 to 1.0602, following the rally to 1.0644, while EUR/CAD fell from 1.4597 to 1.4591 as of 22:24 GMT today after reaching 1.4644 — the strongest rate since February 2010. Meanwhile, CAD/JPY edged lower from 97.14 to 96.91.

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