Loonie hit parity against the US dollar Sep.25/07
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The Canadian dollar hitting parity was greeted with yawns in most places outside Canada. Two-thirds of the charge to parity over the past five years is due to U.S. dollar weakness. Just one-third is due to the strength of the Canadian dollar. To put it more succinctly, the loonie has not risen as much as the U.S. dollar has declined.
The loonie is not doing nearly as well against other currencies. Against the euro, for example, it is up about 8.1% this year, compared with a 13.7% appreciation against the U.S. dollar. Over a longer period of time, it is actually down against the euro. It is currently 4.8% below its most recent peak of last March., and more than 8% below its all-time high of October, 2002.
Canadians might be feeling a tad smug right about now but, to quote an employee at a Hugo Boss store in Buffalo, “we still don’t take the Canadian dollar.” The greenback may be down, but don’t tell the Americans that.
Technically, there is an inside bar on the daily chart for the USD/CAD pair, and on the hourly there is a 1-2-3 bottom. Are we at a bottom for this pair? At this point, it’s anybody’s guess, but I could personally see further strength from here. I think the speculators had their pedal too close to the floor – pushing this pair ever lower. Obviously, some players are getting caught in a ‘short squeeze.’ Ouch!
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