February 25th 2012, Chris Fournier, Bloomberg.com
According to Bloomberg, Canada’s dollar strengthened to the highest level since October against its U.S. counterpart. It traded within a two-cent range this week as retail sales fell while employment data improved in the U.S., Canada’s biggest trade partner (Fournier, 2012).
It is also reported that Canada’s currency weakened even as crude oil, its biggest export, climbed. The loonie (C$1) fell against 14 of its 16 most- traded peers amid speculation that higher oil prices will crimp American household consumption. That might weaken Canada’s exports, about 75 percent of which go to the U.S.
Adam Cole, global head of foreign-exchange strategy at Royal Bank of Canada’s RBC Capital Markets unit in London (Cited in Fournier, 2012) states: “The U.S. dollar is generally weak, and that tends to drag the Canadian dollar down on the crosses as well."
Other important facts by Fourneir are:
1) The Canadian Dollar weakened 3.2 percent over the past year, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The U.S. dollar has lost 1 percent and the euro has fallen 3.4 percent.
2) Also Fournier states that Central banks in the U.S., Europe and Japan will probably add further extraordinary stimulus by expanding the size of their balance sheets, which already equal 25 percent of their gross domestic product, Bank of Canada Governor Mark Carney said in a speech he gave yesterday in New York (2012).
To read the full article, click here: http://www.bloomberg.com/news/2012-02-25/canadian-currency-reaches-four-month-high-amid-increased-demand-for-risk.html
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