Forex - USD/CAD advances amid rising risk aversion

Forexpros – The U.S. dollar was up against its Canadian counterpart on Monday, as risk aversion sharpened amid fears over a potential U.S. sovereign debt default and ongoing concerns over the euro zone’s debt crisis.

 

USD/CAD hit 0.9605 during U.S. morning trade, a daily high; the pair subsequently consolidated at 0.9595, climbing 0.59%.

The pair was likely to find support at 0.9519, Friday’s low and a nine-week low and resistance at 0.9666, the high of July 13.

U.S. President Barack Obama said over the weekend that the U.S. government was “running out of time” in regards to negotiations over lifting the country’s USD14.3 trillion debt ceiling before an August 2 deadline.

Former U.S. Treasury Secretary Larry Summers said that a U.S. debt default would cause panic throughout the financial system and long-term uncertainty.

Ratings agencies Moody’s and Standard & Poor’s both warned last week that a failure to raise the debt limit in time would result in a downgrade in the credit rating of the world’s largest economy.

Meanwhile, in the euro zone, Spanish government bond yields rose to a euro-lifetime high of 6.31%, approaching the 7% mark that prompted peripheral euro zone nations, Greece, Portugal and Ireland to seek bailouts.

Yields on Italian bonds also climbed to a record high of 6.02%, while yields on two-year Greek debt soared to a euro-era record of 34.37%.

The loonie was also weighed as crude oil for delivery in September declined nearly 1% to hit USD96.76 a barrel on the New York Mercantile Exchange.  

Raw materials, including oil account for about half of Canada’s export revenue.

The Canadian dollar was also down against the euro, with EUR/CAD edging 0.02% lower to hit 1.3503.

Earlier in the day, official data showed that foreign investors’ acquisitions of Canadian securities rose significantly more-than-expected in May, led by investment in federal government debt instruments

In a report, Statistics Canada said that foreign investment rose to a seasonally adjusted CAD15.04 billion in May, more than doubling expectations of CAD7.41 billion.

Forexpros - Forex Pros offers a diverse set of professional tools for Forex, Futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house experts, and a widely used economic calendar and

.