Strong Stocks, Gold and Crude Oil Help Push Canadian Dollar toward Parity

A breakout to the upside in the U.S. stockmarket, a new record high in Gold and firmer crude oil prices are helping topush the Canadian Dollar toward parity with the U.S. Dollar.

A breakout to the upside in the U.S. stockmarket, a new record high in Gold and firmer crude oil prices are helping topush the Canadian Dollar toward parity with the U.S. Dollar.

At the mid-session, the USD CAD is tradingat its lowest level since late April and rapidly nearing parity as well as theApril 21 bottom at .9929.

Trading activity this year near parity hasproduced bottoms, but these bottoms have been a combination of oversoldconditions, changes in the Canadian economy and stern warnings from the Bank ofCanada regarding excessive speculation.

Although conditions may reach oversoldlevels on the daily charts, this market is falling based on sound economicreasons so I don’t expect the BoC to make any comments regarding excessivespeculation. This will allow the Dollar/CAD to continue to work lower over thenear-term.

Once it gets through parity, there is alsothe chance of an acceleration to the downside especially if this move istriggered by a surprise event and panic selling ensues. The last time we sawthat type of action was during the initial stages of the 2007 financial crisiswhen heavy selling pressure sent the Dollar/CAD to .9055.

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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