3 Feb 2014
USD/CAD sells off from Friday's multi-year highs
FXStreet (London) - USD/CAD has sold off through the morning session after hitting four-and-a-half year highs on Friday.
The pair hit CAD1.1224 on Friday, the highest level since June 2009 as concerns over emerging market volatility and contagion weighed on risk, and weighed on demand for riskier currencies.
The CAD reaction to EM volatility reflects a stark change in fortunes for the Loonie. When volatility ramped up in 2011, the CAD benefitted from its role as a proxy for the USD with lower exposure to its political risk. However, weak inflation and jobs growth has seen demand wane. Compared to previous governor Mark Carney’s forward guidance-based policies of gradual rate hikes, current Stephen Poloz remains wed to low rates in a bid to stimulate Canadian growth.
USD/CAD is currently trading at CAD1.1073, down 0.41 percent after an early high of 1.1134, recovering slightly from CAD1.1053.
The pair hit CAD1.1224 on Friday, the highest level since June 2009 as concerns over emerging market volatility and contagion weighed on risk, and weighed on demand for riskier currencies.
The CAD reaction to EM volatility reflects a stark change in fortunes for the Loonie. When volatility ramped up in 2011, the CAD benefitted from its role as a proxy for the USD with lower exposure to its political risk. However, weak inflation and jobs growth has seen demand wane. Compared to previous governor Mark Carney’s forward guidance-based policies of gradual rate hikes, current Stephen Poloz remains wed to low rates in a bid to stimulate Canadian growth.
USD/CAD is currently trading at CAD1.1073, down 0.41 percent after an early high of 1.1134, recovering slightly from CAD1.1053.