Canada Dollar Falls as Euro Fears Soar
The Canadian dollar fell as a result of the trade off in risks. The Canadian dollar is seen as a riskier investment of the US dollar and as such, investors turned from it to the US dollar throughout trading on Tuesday.
The US dollar moved to two cents above parity with the Canadian counterpart by trading at midday but it let go of some of its gains by the end of the day. It reached as high as C $1.0182 but ended at C $1.0140. This change is from C $1.0019 on late Monday. That was a drop initially of 1.1 percent before it recovered some of those lossess.
The Canadian dollar is seen as a rather safe investment, though it is not as safe as the US dollar or the ultra safe Japanese yen, hence the sell off on the day.
Euro Zone Debt Concerns
On Tuesday, credit ratings agency Standards & Poor’s Ratings Agency moved Portugal’s long term government debt down by two slots. It also further moved Greece’s sovereign debt problems into the junk territory. The move from the agency is a sign that the agency has doubts that Greece has the ability to implement reforms that are necessary. There is significant concern over Portugal’s debt problems as well, though the country says it would have no problem repaying its debt. Standards & Poor believes that Portugal will be unable to deal with its high debt levels especially since the country already has a weak economic outlook.
The euro fell on Tuesday below US $1.32 level for the first time since April 2009. The euro fell as low as US $.3165 which is a fall of 1.4 percent. When compared to the yen, the euro fell by more than 2 percent, to 122.8 yen. When looking at the dollar index, the US rose 1.1 percent for the day to 82.313.
Also affecting the euro in Tuesday trading is the stock market. As the New York Stock Exchange fell by 213 points on the day, the euro continued its fall as well. That is the largest fall for a one day loss that the market has seen since February.
Australia and New Zealand Dollars
As the global marketplace continued its sell off of the riskier currencies to head for higher ground in the US dollar and the Japanese yen, the Australian dollar and New Zealand dollar also fell. These currencies are less risky than the euro, but traders still looked to the US dollar instead.
The New Zealand dollar moved to $1.8505 during trading against the euro. It hit as high as NZ $1.8650 on Monday’s trading which is a two year high for the currency. The Australian dollar moved to A $1.4382 after it also hit a record high during trading last week of A $1.4512.