Canadian Dollar- all dressed up, where shall we go?


Hands up all those of you who were trading the currencies in December 1991. Well, if you are one of those select few, then you will remember that it was then that the US Dollar / Canadian Dollar was last at the heady level of 1.1400. Sure, we did see 1.1375 in January of this year, but now we are at a crossroads. Do we complete the cycle and revisit the high for the Canadian currency of November 1991 at 1.1190, or do we see a bounce back towards 1.3000? We would have to see a trade and close on a monthly chart above 1.1800 to negate the US Dollar downtrend which started in December 2002. Looking at the currency from the short term traders point of view, we could move sideways for several weeks. From A technical point of view we have support at 1.1375 which if it breaks then 1.1190 is the target. On the upside resistance hangs at 1.1510 then 1.1550. A daily close above 1.1620 would trigger a move up to 1.1800 and then 1.1980. With a healthy trade surplus and good GDP growth of around 2.7pct the bets are all on Canadian Dollar strength. The only hiccup could be if we see the crude oil price fall below 55 us dollars a barrel for any significant period of time.