The CAD was under pressure, as the USD broadly firmed Friday morning, after European Union sources said several euro-zone countries could face “imminent” downgrade. The USD was at C$1.0230 Friday morning, from C$1.0191 late Thursday.
The news that the ratings firm Standard & Poor’s might downgrade the credit ratings of several European governments as early as Friday sparked a broader move higher for the USD and the market’s other traditional safer assets.
The news overshadowed the morning’s data in Canada and the U.S. In Canada, a trade balance report earlier Friday showed a surprise surplus for November. The CAD, however, made no real gains on the result, as a coinciding U.S. report showed that the trade deficit there widened for the first time in five months, as rising oil prices lifted imports and exports to Europe declined.
While Canada’s domestic news seemed encouraging, the widening trade deficit for its big trading partner dampened market sentiment. Net trade there will likely drag on gross domestic product growth for the fourth quarter–growth that was already expected to be modest.
Before the S&P news, Friday was expected to be a quiet day in the market, with the U.S. heading into a long weekend. Equity and bond markets there will be closed on Monday in observance of the Martin Luther King Jr., holiday.
EasyForexNews Research Team