The Canadian Dollar declined for the first time in ten days after crude oil came under pressure and dropped below $90 per barrel. Earlier in the trading session, the currency fell against the U.S. Dollar on speculation economic growth would drive demand for the nation’s resources, which account for about half its export revenue.
Risk Shift Triggers Asset Liquidation Boosting U.S. Dollar
The U.S. Dollar rose against the EUR USD and GBP USD as worries about Portugal’s ability to finance itself increased and demand dropped for risky assets and commodities. The shift in risk sentiment is expected to continue as long as issues about peripheral countries in Europe persist. Traders are not waiting for confirmation, but instead are reacting to the news as a precaution.
Confidence that the European Union, Greece situation is close to a resolution is helping to drive up demand for risky assets. This is helping to boost the U.S. stock indices ahead of the opening. Traders are also becoming more confident in corporate earnings reports because of the recent improvements in the economy.
A drop in global equity markets is helping to boost the Dollar as traders shift out of higher yielding assets. The Dollar started out weaker overnight as traders returned after a U.S. holiday, but it turned higher on technical factors and surprise economic data from competing nations. Shortly before the opening, the Dollar is trading higher versus most major markets except the British Pound.