The Canadian dollar traded lower against its major counterparts today as the credit rating downgrade of six Canadian banks by Moody’s Investors Service damaged the attractiveness of the currency to investors.
Moody’s reduced ratings of such banks as Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, and Royal Bank of Canada. The rating agency cited following reasons for its decision:
Today’s downgrade of the Canadian banks reflects our ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future. Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.
The announcement hurt the loonie, which was already targeted by bears due to struggling prices for crude oil. The fact that oil prices actually rallied today did not help the currency very much.
As for Canada’s economic data, the New Housing Price Index was up 0.2% in March from the preceding month. While it was a slower growth than 0.4% in February, the increase matched market expectations.
USD/CAD rallied from 1.3653 to 1.3711 as of 14:58 GMT today, reaching the high of 1.3750 intraday. EUR/CAD opened at 1.4836, rallied to the session maximum of 1.4944, and is trading at 1.4896 currently. CAD/JPY dropped from 83.65 to 82.83.
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