Loonie Gains Some Ground After China Swap Agreement

The Canadian dollar is gaining a little bit of ground today, following an announcement of a currency swap arrangement with China. Also helping the loonie today is the fact that oil prices are moving higher again.

Loonie is gaining ground today as the factors that generally help the Canadian currency improve. Oil prices are higher today, thanks in part to positive Chinese economic data. China’s solid performance is also likely to help with Canada’s latest international venture.

Over the weekend, The Bank of Canada and the People’s Bank of China signed an agreement for a bilateral swap. The agreement is to be in effect for three years, and allow for a reciprocal swap line between the loonie and the renminmbi. The maximum value is C$30 million, or about RMB 200 billion.

Another piece of the oil puzzle is increased fighting in Ukraine. With tensions on the rise, oil prices are likely to move a little higher, and that should help the Canadian dollar a bit, since the loonie relies heavily on oil for support in Forex trading.

At 11:59 GMT USD/CAD is down to 1.1305 from the open at 1.1325. EUR/CAD is down to 1.4119 from the open at 1.4135. GBP/CAD is down to 1.7979 from the open at 1.7993.

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