The Canadian dollar touched a one year low against the US dollar as the European trading session got underway. The loonie hit its weakest level since September 2010 as risk sentiment was dampened early in the Asian session on concerns of the euro zone debt crisis.
Additionally, falling crude oil prices weighed on the commodity-sensitive currency. Oil is Canada’s main export, and prices fell to their lowest in seven weeks, reaching USD$ 77.10 a barrel in early London trading and soon rebounded.
The Canadian currency soon recovered on hopes the European Central Bank was being more proactive in tackling the region’s debt crisis. There is hope that a Greek default will be averted. Meanwhile Greek Prime Minister George Papandreou is due for talks in Berlin on Sept. 27, two days before German lawmakers vote on the enhanced rescue fund, and there is hope he will give some optimism on progress to avert a default by Greece.
“Through the Asian session, markets have been selling risk and they’ve been buying them back through London, the Canadian dollar just being dragged on by that really,” said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
USDCAD hit a one year high of 1.0384 before easing off to 1.0257.