Loonie Rallies Back to Resistance

Steve Kanaval |

Trading Canadian Dollars via the ETF Canada (FXC) shows the recent low of .68 much too oversold and the Canadian Currency has ripped higher from these lows trading higher since mid January. The question for me is, what happens from here for the remainder of Q1. I think the answer lies in what all markets are glued to which is front month Crude Oil Prices. Everything on earth seems to be watching Oil out of the corner of their eye the Loonie not withstanding.

The Canadian Dollar had a swift 2% rally during yesterdays trade giving hope that a bottom may have been put in for now at .68 cents versus the Dollar. For me it feels like short covering as pricing runs into overhead resistance in the mid 70's. The important thing for Canucks is the decline seems to have subsided for now reversing a trend which began in 2011. A quick look at the FXC shows the lower grind which started at $1.05 and deteriorated to the recent .68 cent low this 35% decline has many currency watchers on edge as the Loonie seems in current lockstep with the Energy decline. The next 2 quarters are critical for all currency pegged to the dollar and renew hope the buck falls from it's perch as the flight to a quality safe haven.

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