The resignation of Egyptian President Hosni Mubarak spurred risk aversion sentiment and pushed up the Canadian dollar that was also bolstered by Canada’s unexpected trade balance surplus today.

The Canadian currency continued to show the unusual tendency to move together with the US dollar, rising today after the President Mubarak agreed to step down as the protesters demanded. While some traders hope that such decision may bring stability to the country, many investors think that absence of the ruler before the elections can only worsen the situation. Blake Jespersen, director of institutional foreign-exchange sales at Bank of Montreal, explained:

After the Egyptian announcement, the market quickly realized that there is a lot of uncertainty about who is going to take control, how these elections are going to progress and what the next government is going to look like.

The loonie was also boosted by the surprisingly good report about Canada’s trade balance. The deficit of the trade balance was expected to widen from C$115 million to C$400 million in December. Instead, the trade balance posted the surplus of C$3.0 billion, the biggest surplus since December 2008.

USD/CAD closed at 0.9867 today, falling from the opening price of 0.9951 after the earlier surge to 0.9985. EUR/CAD declined from 1.3534 to 1.3367.

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