Forex Review – Canadian dollar falls on lower oil prices

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Euro is under pressure against the dollar as renewed euro zone debt fears dragged on market sentiment. Spanish bond yields reached close to 6 percent on Tuesday, the highest since November, possibly putting Spain as the next source of contagion in the debt crisis. Comments from Bank of Spain Governor Fernandez Ordonez, suggesting that Spanish banks may need more capital, added to the negative tone.

 

EURUSD has been range bound since Monday, with the pair trading the lower end of the range in the U.S. trading session, opening New York at 1.3067 and ending at 1.3079.

 

Yen gained against the dollar and euro, strengthening after the Bank of Japan kept its key rate on hold and refrained from announcing more policy easing. Even if many had anticipated no policy changes, some had priced in at least some possible adjustments, especially to the asset purchase program. USDJPY fell to a one-month low of 80.64, down 1 percent on the day. EURJPY fell from 106.01 to 105.48, the lowest since February 21.

 

Risk aversion hurt commodity-linked currencies. The Canadian dollar weakened against its U.S counterpart as oil prices, a major Canadian export, fell sharply. USDCAD rose to 1.0041 compared to the start of North American trading at 0.9985. This was the highest in over a month.

 

AUDUSD was down to 1.0247 in New York trading hours, compared to an earlier day high of  1.0355.

 

Gold prices clawed back some earlier losses after a choppy day, turning positive in the US session as safe haven demand lifted the precious metal. Spot gold rose to $1,662.93, the highest level in a week.

 

Crude oil fell to its lowest since February 13, touching just above the key $100 level at $100.67, amid slowing global growth concerns will hurt oil demand. A weak US non-farm payrolls report from Friday raised concerns.