By TraderVox.com
Tradervox.com (Dublin) – Crude oil have continued to drop for the third day pushing the Canadian dollar down. Crude oil prices dropped as speculation of coordinated global economic stimulus by global central banks rose after Bank of Japan unexpectedly expanded its asset purchases fund by 10 trillion-yen. The Canadian dollar dropped as the US said that its crude oil stockpiles climbed by 8.53 barrels to 367.6 million way high above market expectation of an additional 1 million barrels. US crude oil stockpiles have increased by 4.2 percent.
Eimear Daly, a London-Based currency market Analyst at Monex Europe Ltd said that the Canadian dollar is being impacted by the risk-off mood in the market. The Canadian dollar is a risk-related currency hence it is affected by risk sentiments. Daly also added that the Canadian dollar is consolidating after last week’s sell-off after QE3 announcement. The Canadian dollar dropped as crude oil futures fell by 3.7 percent to 91.76 a barrel in New York. It had experienced drops of 1.4 and 2.4 percents in the previous two days.
Government bonds in Canada advanced for the third day as the ten-year yields dropped by 0.03 percentage points to 1.89 percent. In an auction yesterday, the Bank of Canada sold C$1.4 billion worth of 30-year bonds yielding 2.47 percent. In Japan, the Bank of Japan added 10 trillion-yen to counter the contraction of its economy. The move is seen as the part of global coordinated central bank stimulus move to boost global economy. However, the yen continued to advance against major currencies despite the unexpected announcement.
According to Greg Moore and Shaun Osborne, who are currency strategists at the Toronto Dominion Bank, there is a challenging environment for the risk related currencies including the Canadian dollar, adding that the loonie and the greenback are “forming an inverse head-and-shoulder pattern.”
The Canadian dollar remained low against the greenback at p7.46 cents Per US dollar by the close of day in New York.
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