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Loonie Gains on Growth Outlook
Submitted by Tradervox 2 on Tue, 15/05/2012 - 11:27
Tradervox (Dublin) - The Canadian dollar has enjoyed a good week as it is seen to rise with the safe haven currencies including the US dollar and the Japanese yen. The loonie has increased against most peers today as analysts speculate that North American growth will exceed other regions in the world. This came as Greece tries to form unity government and speculation has risen that the country might exit the euro zone, which has spurred risk aversion in the market.
The Canadian dollar have increased by 0.7 percent over the last week as report from Statistic Canada showed that employment increased close to six times what the market was expecting. Traders are expecting the Bank of Canada to raise interest rates in the coming months. According to some currency strategists, some of the structural factors that are in favor of the Canadian dollar is that the country has the lowest debt to GDP ratio in the world and it has a strong domestic economy. These structural factors may lead to a strong Canadian dollar over the year.
Since the start of the year, the loonie has traded within a 3 cents range against the greenback. It had slid to C$1.0063 on May 9 and it had earlier strengthened to 98 cents in April 27. Economists are expecting the currency to trade at 98 cents by the year end. According to Boris Schlossberg, the loonie has remained strong because of the positive employment data released last week which has made it the best in a group of 10 best currencies in the world.
The Canadian dollar increased against 12 most traded currencies but dropped against the greenback by 0.3 percent to trade at C$1.0037 per US dollar. The positive reports from Canada have been canceled by the market expectation of the Fed minutes to be released tomorrow.
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