The Canadian dollar extended its decline for the third consecutive session today as the negative market sentiment, caused by the difficult situation in the European Union, outweighed the fundamentals that weren’t all bad.
Borrowing costs of French bonds surged to the record and yield on Spanish securities rose at an auction. Europe remains the main drive of the Forex market. And it drives the market to risk aversion, hurting currencies with higher yield and higher risk.
The fundamentals don’t look very bad, especially amid such downbeat mood of traders. Canada’s manufacturing sales rose 2.6 percent to $49.2 billion in September, following the 1.4 percent increase in August, and posted the third consecutive monthly increase. The median forecast was 1.1 percent. The fundamental reports from Europe had also some good data (though, there were bad signs too), but currently sentiment overshadows fundamentals.
USD/CAD rose today from 1.0208 to 1.0236, following the jump to 1.0286, and CAD/JPY went down from 75.39 to 74.79 before trading at 75.15 as of 8:54 GMT today. EUR/CAD rose from 1.3822 to 1.3851 today after two days of losses.
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