The Canadian dollar eases from a 3-1/2 year high against its major counterpart, the greenback in Monday’s European and US trading sessions. After news that al-Qaeda leader Osama bin Laden was killed by US forces, oil prices began to decline. The Canadian Dollar traditionally has a correlation with commodity prices, especially with oil.
Meanwhile equity markets were boosted in reaction to the news, as Canadian bond prices were slightly weaker.
As US President Obama was giving a press conference, the news spread quickly across all the financial markets, especially in European markets as they began to open.
USDCAD began to rise after opening the European session at 0.9480 to 0.9499.
Meanwhile, a tight general election was held in Canada on Monday which contributed to some pressure on Lonnie as the vote could just as easily hand the ruling Conservatives a solid grip on power or leave them so weak they could soon lose office.
“We may see a bit of Canadian dollar weakness drift into the market just on uncertainty with the election results,” commented John Curran, senior vice president at CanadianForex, mentioning the Canadian currency was broadly underperforming.
“I don’t think it’s going to matter who gets in. Eventually the market will come to the terms (with) Canada is a stable country. Things will be fine and the Canadian dollar will strengthen,” Curran said.
At 1300 GMT, USDCAD was trading at 0.9490 which was up from the Asian session open price of 0.9453.
In the early European session, oil was volatile and initially dropped after the news of Bin-Laden being killed, dropping 18 pips during European trading to as low as 110.81 from USD112.33. It then rebounded during US trading to gain 40 pips to hit a session high of USD114.80.