The Revenge of the Loonie
Today’s Spotlight Market
The Bank of Canada left rates unchanged at 0.5%, as expected in their March 9 policy statement. The Bank of Canada pointed out the recent drop in financial market volatility. The Bank also noted that the price of oil has rebounded as well as well the better than expected 4th quarter GDP growth.
Fundamentals
All eyes are on March 22 when Prime Minister Justin Trudeau will reveal his first budget since his Liberal party won the general election in October of 2015. The budget is expected to show a much larger deficit than originally thought. During the campaign, the Liberal party promised to invest in infrastructure to spur job creation and economic growth. The unemployment rate in February rose to a 3 year high of 7.3%. Since winning the election, oil prices have fallen further and the formerly booming province of Alberta is likely to remain in recession throughout 2016. However, the province of British Columbia is doing quite well and is expected to lead Canada in growth for 2016 with a forecasted growth rate of 2.7%.
Technical Notes? -? View Today’s Chart
Turning to the 6 month continuation chart, we see that this mixed, but slightly more positive economic news has helped the Loonie bounce back after being in free fall during the last 2 months of 2015. There?s been an increase in volume after the Loonie bottomed out in January, potentially indicated short covering. 14 day RSI is bullish at 71.10, slightly overbought. The .7800 level looks to be the next point of resistance while support is found at the January lows around .6825.
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