Canada’s Dollar Suffers from ECB

The Canadian dollar rallied today, but was smashed after the European Central Bank press-conference that followed the monetary policy meeting. Forex traders were hoping for the central bank to offer more support to the debt-plagued eurozone countries, but such hopes didn’t materialized.

FX market participants hoped that the ECB would show a willingness to provide more support for the European Union economy. Europe’s central bank indeed take some steps in that direction, lowering the main interest rate by 25 basis points to 1.00 percent and saying that it’s going “to adopt further non-standard measures”. That wasn’t enough, though, and traders were disappointed to hear that the ECB maintained its view that the European governments should bear the weight of rescuing the eurozone themselves.

The disappointment translated to the markets and most commodities slumped. That was bad for Canada as it has a commodity-driven economy and raw materials make up bulk of its exports. Crude oil, the main Canada’s export fell $2.15 to $98.34 per barrel on NYMEX, the lowest price since November 28.

USD/CAD rose from 1.0095 to 1.0225 today as of 23:50 GMT, following the earlier drop to 1.0051 — the lowest price since November 01. EUR/CAD jumped from 1.3538 to 1.3643 after falling to 1.3476 — the lowest level since September 19. CAD/JPY slumped from 76.88 to 75.92.

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