The Canadian dollar is retreating against the US dollar as markets tumble down. It is only one resistance level away from parity. Quick update.
It isn’t only the downgrade by S&P, but also the things that happened beforehand and afterwards, that weigh on the loonie:
Internal reasons:
- Mixed employment figures: Canada saw a drop in the unemployment rate, while a weak rise in the amount of jobs. At the same time, the US enjoyed positive Non-Farm Payrolls.
- Canadian growth almost non-existent: Canada’s monthly GDP has shown too many months of negative growth.
- Ivey PMI plunged: This key indicator of growth has shown that Canada is contracting.
Global problems:
- US growth?: Also in the US, the economy is grinding to a halt, as seen in the recent GDP numbers and revisions. Canada is very dependent on its neighbor from the south.
- European debt crisis: Italy’s problems have also weighed on markets, including oil which Canada exports.
- S&P Downgrade: This just added to the sell off of oil, which is just above $80.
USD/CAD jumped above the resistance line of 0.9913 and is now at 0.9930. It has one more resistance line before USD/CAD parity: 0.9973, which was a peak in March. Above parity, we have 1.0060. Support is now at 0.9913.
For more on the loonie, see the Canadian dollar forecast.
The loonie isn’t the only commodity currency to fall. Also AUD/USD parity is not too far. And the kiwi also collapsed.
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