The loonie weakened for the first time in six days as the crude oil price fell, making Canada’s currency to drop from a 6-month high.
The Canadian currency has been posting consecutive gains against its North American counterpart since November, and this week negative market prices associated with the loonie, combined with speculations that the government may take measures for stopping the Canadian dollar rally brought the national currency down from its recently reached 6-month highest level. The oil future contracts dropped by more than 1 percent following the day of losses for the stock markets, and being Canada one of the main suppliers of oil to the United States, its followed this movement.
Analysts stress on the direct relation between commodities, stocks and the loonie, being the latter one of the currencies with the highest level of correlation with equity markets. The rumors in Canada that the government may adopt quantitative easing, preserving the national exporters by stopping the loonie to strengthen, also are raising eyebrows and creating a bearish sentiment for the Canadian currency, which may already enter a downtrend in the short-term.
USD/CAD remained stable, while AUD/CAD rose from 0.8715 to 0.8742. In Asia, CAD/JPY dropped from 84.45 to 83.22.
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