Canadian dollar is one of today's out-performers, but one analysts argues the currency looks fragile from a technical perspective

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Published on Tuesday, 10 July 2012 13:39

Written by Sam Coventry

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"USD-CAD has remained bound within a relatively tight, 120-point range, since the EU summit from late June, a narrow range when recent market developments are considered" - Eric Théorêt at Scotiabank.

The Canadian dollar (Currency:CAD) is one of the out-performers on the currency markets today as the commodity currencies outperform the lower yielding names such as the pound, US dollar and euro.

The pound Canadian dollar exchange rate is 0.09 pct down at 1.5813 at 14:30 in London.

The US dollar to Canadian dollar rate is 0.18 pct down at 10174. The Australian dollar to Canadian dollar is 0.15 pct higher at 1.0422.

"Risk appetite is alive and well as we approach the NA session, with gains for SEK, MXN and AUD, as CAD and JPY are mid- performers and GBP and EUR remain flat," says Eric Théorêt, Currency Strategist at Scotiabank.


The Canadian currency has remained relatively flat on a month-to-date basis, as data releases in both Canada and the US have remained mild and as CAD drivers - oil and equities - have been supported by renewed central bank activism and reduced volatility.

"Today’s sole domestic release, housing starts, is expected to show a slight decline from the previous month (211.4K) while staying above the 200K threshold (205.0K exp.). USD-CAD has remained bound within a relatively tight, 120-point range, since the EU summit from late June, a narrow range when recent market developments are considered. In this environment, we expect today’s range in USD-CAD to fall between 1.0156 and 1.0200," says Théorêt.

Shaun Osborne at TD Securities believes CAD is looking fragile from a technical perspective:

"On the charts, USD-CAD still looks a little heavy after yesterday’s failure in the low 1.02 area; overnight selling pressure has reversed somewhat as North American trade gets underway but funds probably needs to get back to 1.02 at least in order to steady on the day.

"Intraday, we would look to fade USD strength but the bigger picture – in our opinion – still looks a bit more USD constructive after the rejection of/rebound from the 200-day MA. For now, key support is 1.01 and resistance is 1.0320. From a medium term point of view, we favour a buy dips approach to USD-CAD."