CAD at Record High vs. EUR
The Canadian dollar jumped to the record high against the euro today after the European Central Bank disappointed Forex market participants. The ECB refrained from any serious steps to address the issues of the eurozone. It is not surprising that the loonie gained on the euro, falling versus the US dollar and the Japanese yen at the same time.
FX traders expected some noticeable actions from the ECB after central bank’s President Mario Draghi has promised to take any steps necessary for supporting the euro. Indeed, Draghi reiterated the need to lower borrowing costs and said that the euro should remain in place during the press conference after today’s monetary policy meeting:
The Governing Council extensively discussed the policy options to address the severe malfunctioning in the price formation process in the bond markets of euro area countries. Exceptionally high risk premia are observed in government bond prices in several countries and financial fragmentation hinders the effective working of monetary policy. Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner. The euro is irreversible.
Investors were not hoping for just another bunch of promises, though, but for some actual measures and the resulting disappointment depressed markets. The Standard & Poor’s 500 Index fell as much as 1.1 percent. Crude oil futures dropped 1.1 percent to $87.91 per barrel in New York.
The euro, not surprisingly, fell against other major currencies, including the Canadian one, which reached the all-time high against the shared currency of the eurozone. Safe currencies were winners today amid risk aversion and the loonie fell against them.
EUR/CAD rose from 1.2290 to 1.2406, but fell to the record low of 1.2193 later and traded at 1.2256 as of 18:06 GMT today. USD/CAD climbed from 1.0051 to 1.0073, following the drop to the daily low of 1.0000. CAD/JPY fell from 77.98 to 77.60.
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Earlier News About the Canadian Dollar:
- EUR/CAD Rebound from Record Low as Canada's Growth Slows (2012-07-31)
- CAD Gains vs. USD & JPY, Falls vs. EUR (2012-07-26)
- Poor Canadian Retail Sales Add to Pressure on Loonie (2012-07-24)
- Europe Remains Source of Fear, CAD Still Under Pressure (2012-07-23)
- China's GDP Spurs Speculation About Stimulus, EUR/CAD at Record Low (2012-07-14)