Loonie Crushed By Canadian Bears
Today’s Spotlight Market
The Canadian Dollar continues to fall. The Bank of Canada cut interest rates by 25 basis points last week down to .50%. The Canadian Dollar reacted by dropping to levels not seen since Canada was in a recession in 2009. Friday?s trading saw the Loonie drop below .7700 as the strong bearish trend continued.
Fundamentals
Canada?s economy is likely in recession as the country struggles with the crash in Oil prices. Every month in 2015 has shown a GDP contraction, and most economists predict that the second quarter will show negative growth, putting Canada into recession. The recent Iranian deal pushed Crude Oil prices lower, further straining a weak economy. Uncertainty in China may also hurt Canadian exports.? While growth may return in the second half of the year as lower gas prices may spur stronger auto sales, as of now the Canadian Dollar is on a strong downward trend.
Technical Notes? -? View Today’s Chart
Turning to the 3-month continuation chart, we see some very bearish signs. The 14-day Relative Strength Index (RSI) is extremely oversold at 11.27. There is also a widening gap between the 20- and 50-day Simple Moving Averages (SMA), indicating that prices have been falling quicker in the more recent trading days. The Canadian Dollar has been trading below the 20-day SMA for the past 15 trading days.
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