The Canadian dollar touched parity with the US dollar but bounced back. Positive housing starts figures in Canada helped the loonie, as well as the relative calm in the markets. Update.
USD/CAD is now trading at 0.9905, around the pivotal line of 0.9913, after passing the parity line and briefly touching 1.0009 before retreating.
Canadian housing starts printed 205K in July, higher than 194K that was expected. This is the highest level since November 2008, just before the crash was felt in the housing sector. Also June’s figures were revised to the upside from 197K to 201K.
Oil prices, which the loonie is sensitive to due to its oil exports have stabilized. After falling below $76, and rose. Oil is now trading at $81.5. In addition, stock markets have stabilized after “Black Monday” that followed the downgrade of the US by S&P.
The markets are awaiting the moves by Ben Bernanke: if hints about QE3 are announced, the Canadian dollar will surge (with USD/CAD falling). This is unlikely as detailed in the FOMC preview. If no hints are released, another attempt on parity is likely.
Below, serious support is at 0.9750. Significant resistance above parity is at 1.0060. For more levels, events and analysis, see the Canadian dollar forecast.
Update 18:55 GMT: The Fed decision didn’t consist of any QE3 hints, although it was very depressing regarding the economy. USD/CAD is higher, at around 0.9950, not too far from parity.
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