Canadian Dollar Finally Retreats After 5 Day Rally

The Canadian currency declined today versus most of the 16 main traded currencies after stocks and commodities had their rallies halted as risk appetite eased among traders globally, forcing commodity linked currencies down.

The Canadian dollar together with its Australian counterpart, both considered commodity linked currencies, lost versus the U.S. dollar as this week’s crude oil rally was halted today as risk appetite declined after several days pushing commodities rates and equities up globally. In the intraday comparison one of the few currencies that didn’t manage to pare the loonie’s gains was the Japanese yen, as a shift in the nation’s finance minister position has turned traders to become slightly skeptical towards the Japanese currency outlook. The greenback gained considerably versus the loonie as an employment report to be published tomorrow is likely to add evidences of the U.S. economic recovery expected for 2010.

The loonie suffered today mostly from a corrective movement as traders took profit following 5 consecutive sessions of gains in foreign-exchange markets. Even if today’s performance was negative, the outlook for the Canadian dollar remains among the best in currency markets, as the crude oil tends to climb up on higher demand and Canada’s main trading partner, the U.S., is accelerating its economic growth pace.

USD/CAD traded at 1.0346 as of 19:15 GMT from yesterday’s rate of 1.0290. AUD/CAD remained rather neutral as they are both currencies from commodity producers, trading at 0.9491.

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