There is no rest for the battered Canadian dollar. Long after BOC governor Stephen Poloz finished speaking and sending his dovish leaning remarks following the rate decision that hurt the loonie, the currency continues suffering.
USD/CAD reached a high of 1.1156, breaking above resistance at 1.1124 – the peak of August 2009. A confirmation of the break is needed in this pair, which is certainly volatile, and ran 200 pips in less than a day. Here is a guide to the big levels.
At the time of writing, USD/CAD is trading around 1.1111, which is exactly 0.90 on CAD/USD. The inverse round level of 90 cents also has a psychological impact on those watching CADUSD.
Canadian interest rates are not expected for a very long time, and could even fall if inflation remains low. However, the Bank of Canada did note that the better than expected economic growth in the US and the lower exchange rate of the Canadian dollar could help against deflation.
Here is how it looks on the weekly chart:
Above 1.124, the next level to watch is 1.1290, somewhat still quite far. This was resistance during May 2009. A stronger cap is 1.1350, which worked in both direction at that period of time. Another line that worked only as resistance is 1.1440.
Even higher, 1.1725 was a swing high before the big fall that followed that year, and is looming far above.
On the downside, 1.10 now switches to support. The first move above the round level peaked out at 1.1020. Below, 1.0850 served as resistance during 2010. The ultimate line on the downside is 1.0750, which worked both in 2010 and just before the current run as strong resistance.
For more lines, events, and analysis, see the CDN forecast.
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