Tuesday April 6, 2010 - 18:25:24 GMT
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Canadian Dollar Reaches Parity
The Canadian Dollar
reached parity with the U.S. Dollar for the first time since July 2008.
The strong Canadian economy and banking system continues to attract
global investors into the Canadian Dollar. Firm crude oil and gold are
helping to weaken the Dollar/CAD today. Strong demand for these
Canadian resources should continue to help the economy grow. The charts
indicate that although parity with the U.S. Dollar is the first
objective of this move, downside momentum may not stop at this level.
AUD USD is continuing higher at the mid-session after the Reserve Bank
of Australia raised its benchmark interest rate by 25 basis points to
4.25 early Tuesday morning. This action came as no surprise but hawkish
comments following the rate hike helped this market surge to the
upside. In its policy statement, RBA Governor Stevens said further
hikes are likely despite fears that they will erode consumer spending.
main trend on the NZD USD chart turned down early Tuesday. Last weekâ€™s
IMF report calling the currency overpriced has been putting pressure on
this market for almost a week. Traders are concerned that the high
price New Zealand currency will hurt the export market and keep the
economy from growing. Additional pressure is coming from the strong
rise in the Aussie Dollar. Todayâ€™s New Zealand business sentiment
report showed an improvement in optimism. Despite the sell-off, some
traders still believe the Reserve Bank of New Zealand is on path to
raise interest rates in June.
The Euro is under pressure because
of renewed fears that Greece may not be able to fulfill its debt
obligations. Greece is reportedly asking for more favorable loan terms
from the Euro Zone nations which have previously pledged support. In
addition, stories are circulating that Greece may try to amend its
agreement with the International Monetary Fund. The widening of the
spread between Greek Bonds and German Bunds indicates that traders are
taking protection once again against a default by Greece.
three attempts to break out through a major 50% level at 1.5297, the
British Pound finally succumbed to selling pressure overnight and now
appears to be on a path to retrace to at least 1.5058 before attracting
potential buyers. The main trend remains down, but it is possible that
the British Pound is building a huge support base before its next
rally. The recent release of the 4Q GDP results show that the economy
is improving, but concerns continue to linger regarding the U.K.â€™s
exposure to the Greek fiscal problems as well as political uncertainty.
The Dollar/Yen is trading lower at the mid-session following
Mondayâ€™s closing price reversal top. Japanese investors may begin
bringing funds home because of risk aversion. A weaker stock market
could trigger a surge in the Japanese Yen today. The chart pattern
suggests the start of a 2 to 3 day break or a 50% correction back to
92.26. The latter scenario will likely take place if there is a huge
sell-off in U.S. equities.
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