Canadian Dollar Suffers from Risk Aversion on FX Market
The Canadian dollar dropped today after worse-than-expected US non-farm payrolls put the Forex market in risk-off mode, hurting currencies that are tied to commodities and economic growth. Unsurprisingly, the Canadian currency outperformed the euro.
US employers added 80,000 jobs in June. That was below the anticipated figure of 97,000. Markets reacted negatively to the data. Crude oil dropped as much as 3.5 percent to $84.14 per barrel. The Standard & Poor’s 500 Index was down 0.9 percent.
Andrew Cox, a currency strategist at Citigroup, explained:
Global factors dominate for the Canadian dollar. A situation where the global economy is growing slowly, but not decelerating enough to warrant further unorthodoxy from the Fed, is likely a US dollar-positive scenario.
USD/CAD rose from 1.0140 to the closing price of 1.0192 and CAD/JPY fell from 78.52 to 78.04. Meanwhile, EUR/CAD dropped from 1.2565 to close at 1.2520, while its daily low of 1.2498 was the lowest since June 11, 2010.
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