USD/CAD appears to be breaking out to the downside. From a fundamental standpoint, “The BOC also upgraded future forecasts,” notes Adam Button, Editor at ForexLive. “On several occasions, Carney has noted that household debt as major worry. To me, this points to a very high threshold for lowering rates. If US growth continues to beat expectations the next move will be to price in rate hikes.”
In addition, the IMF warned that if the West imposed financial sanctions on Iran, “it would be tantamount to an oil blockade, and the shock to the market could be as bad as from Libya's revolution last year,” reports the BBC. “Moreover, if Iran goes ahead with a threat to blockade oil exports via the Straits of Hormuz in the Gulf, the IMF said the shock could be even greater,” fueling further demand for the loonie.
At time of writing, USD /CAD is consolidating above the 1.0030 price zone, last at 1.0035. To the downside, support is seen at 1.0010 (9 Aug 2011), with resistance noted at 1.0050 (8 Dec low).
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