Canadian Dollar Weakens On Risk Aversion

The Canadian dollar declined against its major counterparts in the early European session on Monday, as European shares dropped on profit taking ahead of the year end.

Rising political tensions in North East Asia and violence in the Middle East also hurt sentiment.

North Korean leader Kim Jong Un will give his New Year's speech on Wednesday, with all eyes on nuclear-armed Pyongyang's threat of a "new way" after its end-of-year deadline for sanctions relief from the U.S. China's Xi Jinping is also scheduled to give a New Year's address.

Investors also fretted about the pressure on repo market in the United States after the Federal Reserve Bank of New York's latest market repurchase agreement was undersubscribed by banks.

On the trade front, investors are looking for concrete details on the Phase 1 agreement.

In an interview with Chinese state television CGTN on Saturday night, Beijing's ambassador to the U.S., Cui Tiankai, said that China will honor its phase-one trade commitments, and suggested that the U.S. live up to theirs on issues such as Taiwan.

The currency fell against its major counterparts in the previous session, except the greenback.

The loonie depreciated to 0.9144 versus the aussie, its weakest since September 13. The next possible support for the loonie is seen around the 0.93 level.

The loonie fell to near a 2-week low of 1.4647 against the euro from last week's closing value of 1.4612. If the loonie slides further, 1.48 is likely seen as its next support level.

The Canadian currency fell as low as 83.48 against the yen and held steady thereafter. At Friday's close, the pair was worth 83.67.

The loonie pared gains to 1.3079 against the greenback, from an early high of 1.3064, and held steady thereafter. On the downside, 1.32 is possibly seen as the next support level for the loonie.

Looking ahead, U.S. pending home sales, wholesale inventories and advance goods trade data, all for November, are scheduled for release in the New York session.

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