Canadian Dollar Reverts Negative Trend on Stocks Rebound

The Canadian dollar, which posted consecutive days of losses during this week changed its negative trend after stocks recovered globally fueled by a report that showed a quarterly growth for the U.S. economy, which sparked risk appetite once again among traders.

The Canadian currency found grounds to recover part of this week’s losses as the U.S., main trading partner and biggest consumer of Canadian commodities posted the first quarterly growth this year, reviving attractiveness for the loonie which had a number of downgrades in its outlook after the Bank of Canada started to stress on the fact that a strong currency can be an obstacle for a country’s economic recovery, raising fears that interventions can follow a strong rally for the Canadian currency. Even considering today’s rebound, the Canadian dollar is still losing versus its U.S. counterpart in the weekly comparison.

Today’s U.S. growth report was the main reason for the Canadian dollar to gain, as demand for commodities were increased in trading markets, facilitating the loonie to gain significantly, since the country is one of the world’s largest oil producers and one of the biggest suppliers to the United States. The loonie is likely to remain attractive, but as long as the Bank of Canada continues to make negative comments towards the currency’s rally, it is not probably that the loonie will climb massively.

USD/CAD traded at 1.0676 as of 01:29 GMT from 1.0817 hours earlier.