After sliding against its US rival yesterday in response to disappointing Canadian factory sales data and Cyprus uncertainty, the ‘Loonie’ was able to climb against the majority of its currency rivals as the European Central Bank debated its next move.
The Canadian Dollar Exchange Rate was in the region of 0.9754 against the US Dollar as of 14:08 pm GMT
When the Cypriot parliament rejected the levy on bank deposits necessary for the nation to secure a bailout, the market went into freefall and riskier assets broadly declined.
However, since then speculation has mounted regarding the likelihood of the ECB giving Cyprus the time needed to renegotiate its bailout deal, and risk appetite has consequently improved.
The Canadian Dollar also benefited from the expectation that tomorrow’s retail sales figures for January will show an increase. As Canadian retail sales fell by 2.1 per cent in December a gain now would provide the economy with a much needed boost.
When asked about the ‘Loonie’ currency strategist Greg T. Moore commented: ‘The risk seems to be for a stronger Canadian Dollar – the Fed and Canadian data potentially being beneficial to the Canadian Dollar, and headline risks in Europe have more potential to weigh on the Canadian Dollar. There is still room for a bit of a pullback in Dollar/CAD, so CAD strengthening, as long as headline risks remain subdued.’
The Federal Reserve data Moore is referring to, the Open Market Committee Rate decision and Summary of Economic Projections, is due for release at 18:00 GMT.
Economists are forecasting that the Fed will keep its benchmark interest rate at 0 to 0.25.
Canadian retail sales figures will be published tomorrow at 12:30 GMT, a gain of 0.9 per cent has been estimated.
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