A Canadian dollar exchange traded fund continued to strengthen Thursday after the loonie broke through parity with the U.S. dollar on the Eurozone’s plans for recapitalizing banks and Greece’s debt.
CurrencyShares Canadian Dollar Trust (NYSEArca: FXC) was up 1.4% at last check Thursday. The fund recently crossed over its 50-day exponential moving average.
Concern over a potential U.S. recession was quickly forgotten after the U.S. posted a 2.5% expansion in the third quarter, which also quieted fears of a slowdown in Canada, reports Satish Sarangarajan WSJ.com.
The Canadian dollar reflects equities and macroeconomic sentiment in the U.S., which makes up 70% of Canada’s total exports.
The U.S. dollar was trading at C$0.9911 at last check Thursday.
“We would expect USD/CAD to settle into a new C$0.9780-C$1.0080 range over the next week, as the market digests all the recent market developments. Some of the uncertainty around EUR has now been removed. However, the sovereign crisis is a long way from over,” Camilla Sutton, chief currency strategist at Scotia Capital, said.
The Canadian dollar is trading at its highest level against the greenback in more than a month, but the currency has depreciated against other major currencies after the Bank of Canada reduced its growth projections to 1.8% in the four quarters through June from 2.8%, reports Chris Fournier for Bloomberg.
“The positive reaction to the European deal is the overriding factor in the appreciation of all currencies against the U.S. dollar,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said. “U.S. dollar offers can from time to time spill off into Canadian-dollar offers given the North American trade. Moreover, the Bank of Canada and economic downgrades can’t be discounted.”
CurrencyShares Canadian Dollar Trust
For more information on the loonie, visit our Canadian dollar category.
Max Chen contributed to this article.