Bears Eating The Canadian Dollar
Today’s Spotlight Market
The Canadian Dollar looks ready to fall below the .8000 level, continuing a pullback from a short run up in the currency. This pullback, starting in the middle of May, corresponds with the recent run up in the US Dollar, as well as the stabilization of crude oil prices. With no strong bullish trend in crude prices, the Canadian Dollar appears stuck in a rut as the Canadian economy absorbs the shock of the oil price collapse in 2014
Fundamentals
While the headline news was focusing on the US GDP negative growth rate, Canada also disappointed with a decline of .6% annualized for the first quarter of 2015. This was much lower than the expectations of a slight rise in Canadian GDP of .3% as well as being the first contraction since the 2009 recession. Most of this decline is attributable to the energy industry, as well as the harsh winter weather which affected Canada as well as the United States. The Bank of Canada last lowered interest rates in January of 2015 with a surprise rate cut from 1.0% to .75%. The lackluster GDP results will likely increase attention on the Bank of Canada to see if another rate cut might be forthcoming. Many traders will surely try to be prepared for the potential of another surprise announcement.
——————————————————————————————-
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the?“Disclosure Statement for Futures and Options”?prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and?other risks?apply.