The Canadian dollar (Currency:CAD) is doing well this afternoon as a generally risk-on attitude amongst traders keeps it bid.

Converting pounds into Canadian dollars is done off a spot rate of 1.5892, while the same equation for the euro is done at 1.2775. 

The US dollar / Canadian dollar exchange rate is 0.4 pct in the red at 0.9838. This number interestingly forms the bottom of a range forecasted by Scotiabank:


"The more significant driver for CAD is likely to be Friday’s nonfarm payrolls and Canadian unemployment. We expect USDCAD to trade in a relatively tight range leading into Friday. Today’s range is likely to fall between 0.9838 and 0.9882.

The US dollar (Currency:USD) has been sold off in the wake of the ECB press conference; traders have liked what the heard from President Draghi and have pushed the dollar lower as they buy equities, commodities and other high yield assets.

The price of oil has recovered from yesterday's sharp falls, and this too is supporting commodity currencies such as CAD.

Meanwhile, TD Securities have pushed back their forecast for the next tightening cycle from the Bank of Canada to the third quarter of 2013, and advise that they see the risks around that call as evenly balanced. Any sign of an earlier rate hike would be Canadian dollar supportive.

"We maintain our view that the Bank of Canada is unlikely to ease, and we favour paying on short-end swaps and/or shorting BAXs whenever the markets begin to price in easing from the Bank. We expect Canadian bonds to outperform versus Treasuries in the near-term (we like owning Canadian 10s versus the US), but Treasuries are likely to fare better in the first half of 2013 as the Bank of Canada begins to gear up for rate hikes," says Eric Green at TD Securities.

For now though, drivers of the Canadian currency remain in Europe where the crisis and hopes for a solution grind on. As mentioned earlier though, tomorrow's non-farm payroll numbers could provide some excitement.