The Canadian dollar exploded to the upside today amid euphoria that struck the Forex market after US politicians reached an agreement that will help to avoid a financial crisis in the United States.

Vice President Joe Biden and Senate Minority Leader Mitch McConnell devised a deal that will avert the $600 billion spending cuts and tax increases. After a long time of uncertainty and fear, markets celebrated the news. Crude oil, the major Canada’s export, climbed as much as 1.3 percent to $92.97 per barrel on the NYMEX. The Standard & Poor’s 500 Index of stocks advanced 2.5 percent.

In Canada itself, there is less support for the loonie as it is not likely that the Bank of Canada will raise interest rates on the next policy meeting. At least there are no talks about rate cuts and that is positive for the Canadian currency.

USD/CAD dropped from 0.9925 to 0.9860 as of 23:31 GMT today. EUR/CAD slid from 1.3087 to 1.2994. CAD/JPY jumped from 87.21 to 88.47 — the highest settlement since April 2011.

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