Canadian Dollar Dives on Verbal Intervention Efforts by Canada's Flaherty - No Physic

The Canadian dollar was generally trading lower throughout the European and US trading sessions, but comments by Canadian Finance Minister Jim Flaherty just after 13:30 ET hammered the currency down, leading it to end the day as the weakest of the majors. While speaking to reporters, Flaherty said that he was concerned about any “rapid” changes in the Canadian dollar, and that steps can be taken to curb currency volatility. Based on these words and the Canadian dollar’s 17.6 percent appreciation against the US dollar since March 9, it’s fair to say that Canadian government and central bank officials are concerned about the impact of FX rates on the export-reliant economy. Will the Bank of Canada actually step up and physically intervene? Probably not. According to the Bank of Canada’s website, they last intervened in September 1998 after their efforts to prevent a sharp deterioration in the Canadian dollar against the US dollar failed, and the Bank now flouts the belief that the currency’s rate should be determined by the market. Nevertheless, as traders saw today, a little verbal intervention can sometimes have the desired effect on a short-term basis.

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