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Currency Currents
Fri, Jul 18 2008, 14:50 GMT
Currency traders are convinced …
... the Canadian dollar should be trading at par with the US dollar. We’re not sure exactly how traders became convinced, but this explains why we’ve seen a departure between the Canadian dollar’s correlation with commodities and commodity currencies.
At one point we’d have expected the Loonie to surge to new highs along-side crude oil and the Australian dollar. But we’ve found it just can’t shake the tight link between the US and Canadian economies.
In fact, since the Canadian dollar first touched the $1 mark back on September 20, 2007, the USDCAD exchange rate has averaged 9994.093 – or roughly par. It’s been boring if you’re a buy-and-hold type of guy. But if you’re down on the front lines trading in shorter time frames, it’s been a bloodbath ...
Most recently, much of the time has been spent on the top side of that 10-month average rate (meaning relative US dollar strength.) Is the Canadian dollar due to strengthen? If it does, it would likely come at the same time the US dollar strengthens versus the rest of the pack.
Keep your eyes open. Anything can happen.
Regards,
Black Swan Capital
Published on Fri, Jul 18 2008, 14:51 GMT
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