Traders Show No Love For The Loonie
Today’s Spotlight Market
The Canadian economy received some good news on Tuesday as the country?s merchandise trade balance moved to a surplus in September. Canada?s trade balance was reported at a positive C$710 million vs. a revised C$463 million deficit in August. The nation?s exports rose by 1.1%, with auto sales to the U.S. accounting for a large part of the gains. Imports fell by 1.5% as energy products demand fell.
Fundamentals
The Canadian Dollar, known as the ?Loonie? among professional FX traders, has been mired in a 3-year long bear market with its value vs. the U.S. Dollar (USD) falling to levels not seen since 2009. The Canadian economy has seen slower growth than its neighbor to the south, as lower commodity prices and rising consumer debt levels have impacted the country?s economic strength. Bank of Canada (BOC) Governor Stephen Poloz appears to have no immediate plans to raise interest rates from its record low of 1%, which is allowing the ?Loonie? to continue to weaken vs. the USD. A weaker Canadian Dollar will help the country?s exporters and continue to improve the balance of trade with the U.S. With continued slack seen in the Canadian economy, the BOC may continue with accommodative monetary policies potentially well after the Federal Reserve has started to raise U.S. short-term interest rates, which would add fuel to the bear market trend for the Canadian Dollar.?? ?
Technical Notes – View Today’s Chart
Looking at the weekly continuation chart for the Canadian Dollar, we notice the market well embedded in a downward trend with prices currently well below both the 20 and 200-week moving averages. The 14-week RSI is approaching oversold levels with a current reading of 32.78. There appears little in chart support until just above the 0.8500 price level with resistance found just above 0.9000.
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