Canadian Dollar Reaches Parity

The Canadian Dollar reached parity with the U.S. Dollar for the first time since July 2008. The strong Canadian economy and banking system continues to attract global investors into the Canadian Dollar.

The Canadian Dollar reached parity with the U.S. Dollar for the first time since July 2008. The strong Canadian economy and banking system continues to attract global investors into the Canadian Dollar. Firm crude oil and gold are helping to weaken the Dollar/CAD today. Strong demand for these Canadian resources should continue to help the economy grow. The charts indicate that although parity with the U.S. Dollar is the first objective of this move, downside momentum may not stop at this level.

The AUD USD is continuing higher at the mid-session after the Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to 4.25 early Tuesday morning. This action came as no surprise but hawkish comments following the rate hike helped this market surge to the upside. In its policy statement, RBA Governor Stevens said further hikes are likely despite fears that they will erode consumer spending.

The main trend on the NZD USD chart turned down early Tuesday. Last week’s IMF report calling the currency overpriced has been putting pressure on this market for almost a week. Traders are concerned that the high price New Zealand currency will hurt the export market and keep the economy from growing. Additional pressure is coming from the strong rise in the Aussie Dollar. Today’s New Zealand business sentiment report showed an improvement in optimism. Despite the sell-off, some traders still believe the Reserve Bank of New Zealand is on path to raise interest rates in June.

The Euro is under pressure because of renewed fears that Greece may not be able to fulfill its debt obligations. Greece is reportedly asking for more favorable loan terms from the Euro Zone nations which have previously pledged support. In addition, stories are circulating that Greece may try to amend its agreement with the International Monetary Fund. The widening of the spread between Greek Bonds and German Bunds indicates that traders are taking protection once again against a default by Greece.

After three attempts to break out through a major 50% level at 1.5297, the British Pound finally succumbed to selling pressure overnight and now appears to be on a path to retrace to at least 1.5058 before attracting potential buyers. The main trend remains down, but it is possible that the British Pound is building a huge support base before its next rally. The recent release of the 4Q GDP results show that the economy is improving, but concerns continue to linger regarding the U.K.’s exposure to the Greek fiscal problems as well as political uncertainty.

The Dollar/Yen is trading lower at the mid-session following Monday’s closing price reversal top. Japanese investors may begin bringing funds home because of risk aversion. A weaker stock market could trigger a surge in the Japanese Yen today. The chart pattern suggests the start of a 2 to 3 day break or a 50% correction back to 92.26. The latter scenario will likely take place if there is a huge sell-off in U.S. equities.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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