Is the CAD getting ready to rally back towards parity? Or is this just a slip up on behalf of the USD?

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Published on Wednesday, 27 June 2012 13:57

Written by Will Peters

"Weakness below 1.0230/35 support may see the USD slip back under 1.02 temporarily" - Shaun Osborne at TD Securities.

The Canadian dollar (Currency:CAD) is on the verge of a potential comeback after under-performing through the course of June. (PS - Latest investment bank FX forecasts are available at our IMT site, access Free via this Facebook entrance path).

According to analysts at Scotiabank, "on a medium-term basis traders have priced-in a lot of bad news, potentially opening the door to a slow rally back towards parity."



Over at TD Securities there is also a sense that the Canadian dollar is in for some gains, but, analyst Shaun Osborne sees weakness in the USD as a buying opportunity:

"USD-CAD slipped back a little more aggressively through the close than we expected yesterday and the undertone remains somewhat soft today.

"We can only attribute this to position adjustment (USD long liquidation) ahead of this week’s EU-driven event risk. Intraday so far, the CAD has been confined to a narrow range but downside risks for USD/CAD remain.

"Weakness below 1.0230/35 support may see the USD slip back under 1.02 temporarily. We still view USD weakness as a buying opportunity, however, given what remains a less-than-supportive backdrop for risk assets."

Canadian dollar today

In the absence of tier-1 fundamental data and with the EU summit looming, markets are quiet leading into the NA market. Equities are slightly positive and this has helped the 'commodity currencies' which includes CAD.

The pound to Canadian dollar exchange rate is 0.26 pct lower on Wednesday's close, GBP-CAD is at 15982.

The US dollar to Canadian dollar exchange rate is 0.19 pct higher at 1.0260.

The Australian to Canadian dollar is 0.34 pct up at 1.0343.

The euro is virtually unchanged against the Canadian dollar at 1.2795.