The U.S. dollar pared gains but remained close to three-week highs against its Canadian counterpart on Friday, as news of the U.K.’s decision to leave the European Union rattled markets and sent the greenback broadly higher.
USD/CAD was up 1.49% in early U.S. trade at 1.2969, off a three-week high of 1.3100 hit overnight. The loonie climbed to two-and-a-half year highs of 1.7255 against the pound earlier Friday, before GBP/CAD settled back at 1.7744, still down 6.64%.
Market sentiment was hit after the U.K. voted by a substantial margin to leave the EU in a landmark referendum, with the Leave side winning 52% of the vote, against 48% to remain.
The Bank of England said Friday it would take all necessary steps to secure monetary and financial stability after the shock Brexit result.
“The Bank of England is monitoring developments closely,” it said in a statement.
Bank of England Governor Mark Carney said the central bank would consider in the coming weeks whether to take additional policy responses but added that it has little room to ease.
The European Central Bank also commented on the day’s events, saying it is ready to handle the impact of Brexit on markets and the banking system.
Shortly after the Brexit news, David Cameron said he will be standing down as U.K. Prime Minister before his Conservative Party’s conference in October.
The outcome of the British referendum also sent oil prices down over 4%, which added to pressure on the commodity-related Canadian dollar.
In the U.S., data on Friday showed that durable goods orders fell 2.2% in May, compared to expectations for a 0.5% downtick and after a revised 3.3% increase the previous month.
Core durable goods orders, which excludes transportation items, slipped 0.3% last month, disappointing expectations for a 0.2% rise.
The loonie was sharply higher against the euro, with EUR/CAD down 1.10% at 1.4332, its lowest since April 29.