Stronger Equities Providing Momentum to the Canadian Dollar

(CEP News) - A bounce in risk appetite is helping support the Canadian dollar against the greenback and causing it to test key support levels.

Traders and strategists are once again watching the 1.2500 level in the USD/CAD. The cross saw a steady decline overnight as positive sentiment helped spark modest rallies in global equities markets. The USD/CAD hit a low of 1.2468.

Jacqui Douglas, currency strategist from TD Securities, said the cross remains very choppy and that the U.S. dollar remains vulnerable to further losses.

“We are not sure there is much more downside movement to come today but the USD’s failure to take a run at the mid/upper 1.27s suggests the underlying bull momentum behind this USD move is running out of legs,” she said.

Matt Perrier, currency analyst from BMO Capital Markets, is not ready to call an end to the run in the U.S. dollar. Looking at technical factors, he said the USD/CAD is trading in oversold territory and appears to be forming a base.

“I look for USD/CAD to remain relatively range bound on the day but would still lean towards buying USD dips,” he said.

With the USD/CAD trading in “no man’s land” currency strategists from CIBC are on the sidelines, waiting for more decisive moves. With the cross expected to be range bound between 1.2600 and 1.2500, they said there is little reason to take a position.

Euro/USD up 2.13 cents to 1.2744

USD/CAD down 1.16 cents to 1.2494

USD/Yen up 0.52 points to 94.31

GBP/USD up 2.25 cents to 1.4437

AUD/USD up 1.44 cents to 0.6515

Euro/Yen up 2.65 points to 120.17

Euro/GBP up 0.10 pence to 0.8827

GBP/CAD up 1.16 cents to 1.8037

CAD/Yen up 1.09 points to 75.47

The U.S. Dollar Index is down 1.00 points to 87.01

All data taken at 9:16 a.m. EST

By Neils Christensen, neilsc@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca

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Posted in Categories: Canada, Economy, Forex, Releases, Stocks, USA.

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