Canadian Dollar At Parity As BOC Carney Expected To Hold Rate
The Canadian dollar has gained versus its U.S. counterpart as risk trends continue to dictate the recent price action. Euro-zone policy makers yesterday laid out plans designed to help banks, with a revived strategy, to deal with the ongoing debt crisis. It is thought that Europe’s bailout fund could potentially be more substantial than was originally forecast.
- The BOC Rate Statement, today, is forecast to have the Canadian interest rate unaffected at 1 percent.
- Crude oil has gained over 15 percent in October, which is the largest month-to-month gain recorded since Mid 2009. The latest COT report data shows that speculators accelerated bullish wagers by almost 9% on crude oil which is closely correlated with the Canadian dollar.
Canadian Dollar Daily Chart – Loonie At Parity
- Parity is closely aligned with previous price structure resistance which could potentially become support.
- The previous swing low at 1.0041 on the 17/10/11 rallied over 200 pips showing buying interest around parity. The question now is whether the supply demand dynamic is still in place to give another push higher or whether this previous dip has see USD/CAD bulls gibe their all for now. The first test of a level often has the most impact.
- Price action confirmation is certainly favoured given the aforementioned previous level test. A break through parity and close above the level with a pinbar, bullish engulfing or similar would potentially be an interesting setup for Loonie bulls.
- Any failure to hold above parity could initially see the 0.9781 16/9/11 swing low come back into focus followed by the 0.9724 level.