Canadian Dollar Approaching Parity With USD on Global Recession

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The Canadian dollar is on the retreat once again. Fears about the stability of the European banking system, horrible data from the US weigh on oil prices and on the loonie. 

USD/CAD is now trading at 0.9920, just above the 0.9913 line. The break isn’t confirmed yet. Before USD/CAD parity, the 0.9977 provides further resistance. Support is at 0.9850. It turned from resistance to support, and is left far behind.

There are growing fears about the stability of the European banking system. US regulators are worried. One European bank could not get US dollar funding and had to go to the ECB for this – and pay a higher price. Some European banks are leveraged at levels that are too close to Lehman.

Canada is highly sensitive to its huge southern neighbor, more than anything else.Canadian Dollars

In the US, things are shaky as well. The most shocking figure was the Philly Fed Index, which plunged to -30.7 points – the worst in almost two and a half years.

Global stock markets are plunging, US yields are under 2% and oil prices, which Canada exports, are tumbling down once again. WTI Crude is currently at $84, after hitting $89 yesterday. This is still higher than under $76 seen last week.

All these bad news counter relatively OK data published in Canada: the Leading Index rose by 0.2%, marginally lower than +0.3% that was predicted. Canadian Wholesale Sales rose by 0.2%, as expected.

For more events and technical levels, see the Canadian dollar forecast.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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