Search ForexCrunch

USD/CAD fell to levels last seen at the fall of 2007, long before the financial crisis. Canadian strength got it close to these levels, and the European optimism send it below. Where will it go from here?

Dollar/CAD is now at 0.9435, below the trough of 0.9448 at the end of April. It already dipped to 0.9423, and is quite cautious at these levels. During the past weeks, positive data from Canada, including a good jobs report and relatively optimistic forecasts from the BOC helped the pair dip lower and eventually break below support at 0.9520.

We also had positive news from the housing sector in recent weeks: building approvals and housing starts came out better than expected in Canada.

The final move came when the draft of the EU Summit was leaked. Hope for growth in Greece and the strong determination in general, sent waves of optimism around the world. This sent the US dollar lower and gave the loonie the final cut.  This optimism also pushed oil prices a bit higher, also aiding Canada.

So what’s next?

Looking to the fall of 2007, we can see that 0.9420 is the next line, quite close. This may explain the slow move. Below, 0.9250 can provide an additional cushion.

Tomorrow, two important figures are released in Canada: the Consumer Price Index (CPI), and retail sales. Both include headline and core figures.

For more on USD/CAD, see the Canadian dollar forecast.