Europe Remains Source of Fear, CAD Still Under Pressure

The Canadian dollar was weak today. The explanation for the poor performance was simple: worries about Europe and its debt gain strength again. The Canadian dollar fell even versus the euro, which itself was under pressure from the negative sentiment.

The yield of Spanish bonds surged to 7.5 percent. It broke above the 7 percent level that is considered important as other indebted countries asked for a rescue after their borrowing costs broke through that line. Greece also makes investors nervous as it is not likely to fulfill its obligations for the Troika.

The things in Canada itself look good as Cnooc Ltd., the largest offshore oil and gas explorer in China, bought the Canadian company Nexen Inc. That shows an interest from overseas investors in Canadian assets. Yet the Canadian currency paid more attention to the bad foreign news that to the good domestic ones.

USD/CAD climbed from 1.0138 to 1.0191 as of 21:47 GMT today, jumping as high as 1.0204 intraday — the highest price since July 12. EUR/CAD was up from 1.2286 to 1.2340, while earlier today it reached the record low of 1.2278. CAD/JPY declined from 77.37 to 76.83 and its daily minimum of 76.60 was the lowest since June 29.

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