Tradervox.com (Dublin) – The Canadian dollar was pushed by the rising risk appetite spurred by stocks and crude oil rising prices. The loonie increased to the highest since May against the US dollar as the Canadian business spending advanced more than the market had predicted. Further, the loonie increased as Boston Federal Reserve Bank President Eric Rosengren said that the central bank should take an “open-ended” quantitative easing. The gain also came as Angela Merkel Government indicated that it would support the European Central Bank decision to embark on a bond-buying program as a measure to curb the rising borrowing cost in major economies in the 17-nation trading bloc.
Talking about the rising investor sentiments, Joe Manimbo who is a Market Analyst at Western Union Co. in Washington said that it has been boosted strong showing in the US economy and speculations that the ECB will soon make a move to quell the debt crisis in euro zone. The Canadian currency also rose as government bonds fell for the second day. The 10-year yield went up by 0.09 percentage point to settle at 1.84 percent. The implied volatility on the dollar-loonie pair rose to 6.36 after it had declined to 6.22 percent on July 20, which is the lowest level it has been since 2007.
According to Camilla Sutton, who is the Chief Currency Strategist in Toronto at the Bank of Nova Scotia said that the announcement by the ECB President Mario Draghi last week has pushed volatility lower. She added that when the risk is a low as it is now, the market is on a risk-on mood and commodity related currencies tend to strengthen against major peers.
The Canadian dollar strengthened by 0.3 percent against the greenback at the close of trading in Toronto yesterday to close the day at 99.70 US cents; it had earlier touched its strongest since May 11 during intraday trading of 99.63 cents.