Canadian Dollar advances on Draghi Remarks

Submitted by Tradervox 1 on Fri, 27/07/2012 - 09:59
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Tradervox.com (Dublin) – The Canadian dollar climbed to its strongest in more than two months against the greenback after the European Central Bank president Mario Draghi indicated that the central bank would do everything possible to protect the euro, sparking demand for riskier assets. Further, the increase came as world commodities including stocks and crude oil prices increased. The Canadian dollar is set to record a weekly gain against the US dollar this week.

The market has been moved by Draghi’s comment today, which is something Ravi Bharadwaj, a market analyst in Washington at Western Union Business Solution noted in an interview today. He also added that the risk appetite, which is propelling the Canadian dollar, may recede if the ECB fails to back up Draghi’s comments. The Canadian dollar also moved up as the Standard & poor’s 500 Index advanced to by 1.7 percent while crude oil for September delivery increased by the same margin to settle at $90.47 per barrel in New York. Stocks and crude oil are some of the commodities related to the Canadian dollar. Crude oil is Canada’s largest export commodity to the US.

However, as the Canadian dollar was increasing, the Government bonds dropped for a second day, while the ten-year yields increased by six basis points to 1.65 percent. The Canadian dollar, which has risen by 2 percent this year, strengthened past the 50-, 100-, and 200-day moving averages leading to option traders paying less for the protection against the currency declines versus the US counterpart. In analyzing the currency movements, Jeremy Stretch who is the Chief Currency Strategist in London at Canadian Imperial Bank of Commerce, noted that the 100-moving average of C$1.0087 has been a significant level to the market than the 200-day moving average.

The Canadian dollar increased by 0.9 percent against the dollar to trade at C$1.0102 at the close of trading yesterday in Toronto, which is its strongest since May 16.

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