The Canadian dollar dropped yesterday as the unexpected increase of the nation’s trade deficit added to pessimism caused by the budget impasse in the United States. The currency attempts to rebound against the Japanese yen today, but keeps losses versus other major currencies.
US politicians continue to bicker even as other nations urge them to get together and avoid hurting the world economy. There is not much time left before the USA runs out of money and traders become more and more worried as the deadline nears. Currencies linked to growth, like the loonie, have hard time to find demand under such circumstances.
Domestic data was not helping the Canadian currency either as the trade deficit widened from C$1.2 billion in July to C$1.3 billion in August. Analysts have expected it to drop to C$0.7 billion. As for positive news, housing starts rose to 190,492 in September from 188,440 in August instead of falling as was expected.
USD/CAD rose from 1.0310 to 1.0366 yesterday and traded at 1.0371 as of 2:13 GMT today. EUR/CAD jumped from 1.4003 to 1.4070 on the previous trading session and stayed near this level at the current session. Meanwhile, CAD/JPY climbed to 93.78 today after yesterday’s drop from 93.75 to 93.40.
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