Commentary on the USD/CAD pair Oct. 25/07
Forexmentor.com Forex Trading Price Action
Some currency watchers see the beginnings of a “long overdue” correction in the Canadian dollar, after its meteoric rise – dubbed “Type II” currency appreciation by the Bank of Canada – the type driven by currency speculation. The Toronto-Dominion Bank of Canada sees it falling to US90 cents by the end of 2009, based on a rebound in the U.S. economy, a healthier U.S. dollar, and overall softening of commodity prices (lower commodity prices as a result of the credit crunch slowing the global economy). The Royal Bank of Canada believes something closer to US98 cents might clear away most of the speculative froth from the currency. But, they see even lower prices – perhaps US92 to 95 cents – before the currency finds a longer-term comfort level.
As at the week of Oct. 22/07, the commercial traders are short gold and the Canadian dollar, and long the U.S. dollar. This augurs well for price weakness in the Aussie and loonie currencies – translation, strength in the USD/CAD pair and weakness in the AUD/USD pair. Of course, the fly in the ointment is the severe weakness in the U.S. dollar that still has to get legs before the other currencies can seek their respective levels. This news is from www.forexmentor.com.
Source: Globe and Mail/Financial Post – Oct. 23/07
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