RTTN:Canadian Dollar Strengthens On Higher Crude Prices
The Canadian dollar edged higher against its major rivals in early deals on Monday as the price of crude oil was moving higher amid firm global cues, with the US dollar trading weak versus a basket of currencies.
Light Sweet Crude Oil (WTI) futures for September delivery, rose $0.56 to $108.61 a barrel. Last week, oil advanced to a fresh one-and-half year high higher tracking rising global equity markets on some better-than-expected economic data and earnings news from the U.S.
Investors also speculated on the Federal Reserve Chairman Ben Bernanke's statement before the Senate Banking Committee that there was no set time line to start tapering down the Fed's quantitative easing program.
Last Friday, the People's Bank of China scrapped controls on lending rates, which means banks are now free to set their own rates, with a few exceptions and Japanese Prime Minister Shinzo Abe's ruling Liberal Democratic Party won a decisive victory in parliament's upper house, strengthening Abe's mandate to push ahead with difficult economic reforms long overdue.
The G20 nations agreed on measures to boost growth and jobs but they made little progress in reaching a consensus on how to get the global economy back on track. The G20 financial ministers pointed out in a joint communique that they are committed to further "calibrating the pace and composition of fiscal consolidation plans to economic conditions and fiscal space." They have pledged to accelerate efforts to revive growth, which remains "too weak" and "fragile."
The Portuguese President Anibal Cavaco Silva has backed the centre-right coalition government and ruled out snap polls after Portugal's three main parties failed to reach a pact on crisis talks, threatening to derail the bailed-out government's bid to overhaul its finances.
The Bank of Japan is prepared to take additional measures if required, Policy Board member Takehiro Sato said in a speech today. "The Bank does not exclude the implementation of additional measures and will not hesitate to fine-tune its policies flexibly when unexpected tail risks materialize," Sato said while addressing business leaders in Fukushima.
The Canadian dollar advanced to 1.0330 against the greenback, its strongest level since July 11 and just a few pips short of a monthly low. Further outlook is loonie bullish as the USD/CAD pair has been swinging back and forth in an ascending channel and the pair is now heading towards the trend-line support around the 1.0265/70 area.
The Canadian currency also climbed to 1.3609 against the euro, snapping back from a 4-day low of 1.3656 hit an hour ago. Against the yen, the Canadian dollar recovered gains to as much as 96.76 from Asian session's 4-day low of 96.22. If the loonie extends uptrend, likely resistance levels are seen at 98.10 against the yen and 1.3590 against the euro.
