Loonie Drops Against Majors as Commodity Prices Fall

By TraderVox.com

Tradervox.com (Dublin) – The Canadian currency has declined against most majors after speculation of cease fire agreement in Middle East left the price of oil down from a one-month high reached earlier. However, the currency losses were limited as it had earlier registered its biggest gain in a month against the greenback yesterday as news of International Monetary Fund’s consideration of classifying the loonie and Aussie as reserve currencies hit the market.

According to Oanda Corp’s Head Analyst, Dean Popplewell, the slight risk-on mood in the market will have insignificant effect on the Canadian dollar and it will only have considerable boost if it moves against the crosses such as the euro. Popplewell, who is based in Toronto, added that there are too many uncertainties as we get to the year end, suggesting that the fiscal cliff in US and the situation in Middle East are some of the issues that will continue to affect the Canadian dollar.

Crude oil, which is Canada’s largest export commodity, declined by 2.2 percent in New York to $87.34, while the futures contract closed at $89.28, the highest settlement since 19^th October. The decline in crude oil prices occurred after the Egyptian President Mohamed Mursi indicated that the Israeli aggression against Gaza would end yesterday.

According to David Bradley, the Director of Foreign Exchange trading at Scotia Capital Inc in Toronto, the currency remains range-bound today after yesterday’s rally. He predicted that the Canadian dollar would experience slight decline as the risk related currencies decline on reduce risk appetite ahead of US Thanksgiving holiday.

The Canadian dollar has advanced against most majors by 1.3 percent this year, while the euro has declined by 2.6 percent. The greenback has dropped by 1.4 percent in the same period as the yen dropped the greatest this year, declining by 7.8 percent.

The loonie was slightly changed against the dollar, dropping by 99.68 cents per dollar at the close of trading yesterday in Toronto. It had advanced to 99.55 cents per dollar during intraday trading yesterday, the strongest it has been since November 8.

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