Wednesday October 13, 2010 - 18:32:55 GMT
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Forex Hound - www.forexhound.com
Strong Stocks, Gold and Crude Oil Help Push Canadian Dollar toward Parity
A breakout to the upside in the U.S. stock
market, a new record high in Gold and firmer crude oil prices are helping to
push the Canadian Dollar toward parity with the U.S. Dollar.
At the mid-session, the USD CAD is trading
at its lowest level since late April and rapidly nearing parity as well as the
April 21 bottom at .9929.
Trading activity this year near parity has
produced bottoms, but these bottoms have been a combination of oversold
conditions, changes in the Canadian economy and stern warnings from the Bank of
Canada regarding excessive speculation.
Although conditions may reach oversold
levels on the daily charts, this market is falling based on sound economic
reasons so I donâ€™t expect the BoC to make any comments regarding excessive
speculation. This will allow the Dollar/CAD to continue to work lower over the
Once it gets through parity, there is also
the chance of an acceleration to the downside especially if this move is
triggered by a surprise event and panic selling ensues. The last time we saw
that type of action was during the initial stages of the 2007 financial crisis
when heavy selling pressure sent the Dollar/CAD to .9055.
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