Loonie plunged as oil prices decline and Yen up to seven month high

Loonie plunged as oil prices decline and Yen up to seven month high

09-26-2009 12:22

The Loonie, an informal term for the Canadian Dollar, posted this week one of the weakest results in months due to falling raw materials rates at the end of this week’s trading session, affecting the forecast for the North American currency, since crude oil is one of Canada’s most important export products. The Group of Twenty Finance Ministers and Central Bank Governors (G-20) assembly impacted markets at the end of this week, while the Japanese Yen posted one of the best results in foreign-exchange markets, reaching the highest level in seven months on the back of the G-20 statements.

Oil prices decline

The growing trend of the Loonie shifted due to numerous factors, as the rising demand for US Dollar-priced assets and declining commodity rates changed the bullish tone of the Canadian Dollar which hit a one-year record high this month. Interventions were not required in order to devaluate the Canadian currency against the majority of the 16 most popular currencies after concerns raised in Canada's central bank regarding a high level of the nation’s currency. The Loonie dropped more than 2% during this week’s trading session as a result of a decline in raw materials prices, since energetic commodities are Canada’s most important exports.

Loonie plunged

Currency analysts indicate that several reasons caused this week’s reversal from an optimistic forecast for the Loonie to a negative sentiment within a short period of time. A downturn in energetic commodity prices is surely one of the main factors that shifted the Canadian Dollar’s forecast to a negative tone. However, if risk-taking continues, the Canadian currency will be able to rise again.

Yen up

The Japanese finance minister, Hirohisa Fujii, stated today in the G-20 assembly his incompatible point of view regarding intervention in foreign-exchange markets, increasing the attractiveness of Yen-priced trading options at the end of this week, while the Japanese Yen rose against the 16 most popular currencies in the Forex market.