After a bit of optimism, risk aversion is creeping back, and that is pulling the Canadian dollar down against the US dollar. Stocks are pointing to a lower open today, and European stocks are heading lower. However, the recent losses aren’t all due to risk aversion; there’s been some profit taking as well.
Yesterday, loonie appreciated to its highest level since early May, thanks to optimism that the ECB would step in and do something to keep the sovereign debt situation under control. However, profit taking soon set in, and risk aversion made an appearance. Equities are heading lower today, and that is weighing on the Canadian dollar.
However, things aren’t as bad as they could be. Oil prices are higher today, and that is providing some support for the Canadian dollar, a currency that is connected to oil prices, since it is one of the major assets. Between the increase in risk aversion, and the opportunities to take profits, though, it is likely that the loonie will remain a little lower today.
At 12:38 GMT USD/CAD is moving higher, up to 0.9934 from the open at 0.9892. EUR/CAD is also higher, moving up to 1.2377 from the open at 1.2349. GBP/CAD is up to 1.5685 from the open at 1.5610.
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