Loonie on a Fourth Week of Gains

The Canadian dollar is benefiting from speculations of policy action by foreign central banks.
Now on its third consecutive week, the Loonie currency is in its longest streak of gains against its US counterpart.

The rise in demand for the medium of exchange with the aquatic bird is fueled by speculation that central banks will take action to bolster economic growth. It is quite ironic that the demand for riskier assets such as the Loonie is sustained, what with the drama in the Euro Zone once more unfolding.

Last week, Greek Prime Minister Antonis Samaras admitted that Greece is in a “Great Depression” similar to the American one in the 1930s. Also, Moody’s Investors Service changed its outlook for top-rated Germany, the Netherlands and Luxembourg to negative from stable. The ratings agency, just after a day, did the same for the Euro region’s bailout fund, the European Financial Stability Facility.

Yet, the price hikes are supported by expectations that the Federal Reserve and the European Central Bank will deliver new measures to underpin their fragile economies – and in turn, boost global economic recovery. The Fed is scheduled to hold a two-day rate setting meeting from Wednesday, followed by Thursday’s ECB policy meeting where expectations are running high after central bank chief Mario Draghi pledged last week to do everything necessary to protect the single currency bloc.

European Central Bank President Mario Draghi has gone on the offensive by pledging to do whatever it takes to preserve the Euro. Draghi is trying to build a consensus among governments and central bankers for a plan to ease borrowing costs in Spain and Italy before ECB policy makers convene on Thursday. He meets with US Treasury Secretary Timothy Geithner in Frankfurt today and is also attempting to win over Bundesbank President Jens Weidmann, who is a critic of ECB bond purchases.

Would the Loonie gun for a fourth straight week? That remains to be seen.

Article by AlgosysFx Forex Trading Solutions