Canadian dollar boosted as Carney indicates Canada is in a 'very different place'

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Published on Thursday, 09 August 2012 11:54

Written by Sam Coventry

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USD/CAD’s grind lower has stalled intraday, with the market backing off the overnight lows very modestly" - Shaun Osborne at TD Securities.

The Canadian Dollar (Currency:CAD) has been underpinned close to yesterday’s highs against the USD by comments from BoC Governor Carney.

The pound to Canadian dollar exchange rate is 0.14 pct in the red at 1.5539.

The US dollar to Canadian dollar exchange rate is 0.03 pct in the blue at 0.9947.

The Australian dollar to Canadian dollar is 0.05 pct lower at 1.0505.


"The AUD and the CAD are modest out-performers on the session so far but there is no strong sense of a pro-risk bias in the markets today despite softer Chinese data boosting expectations for more monetary easing," says Shaun Osborne at TD Securities.

Governor Carney was speaking in London and indicated that the Canadian economy was in a “very different place” to others and some withdrawal of policy accommodation may become appropriate.

From a technical perspective, "USD/CAD’s grind lower has stalled intraday, with the market backing off the overnight lows very modestly. The trend lower remains technically strong but we remain concerned that – in a world that remains quite “dangerous” as Mr Carney pointed out – the CAD looks a little rich against the USD at least here. Support is 0.9930, resistance is 0.9985 on the day," says Osborne.

Elsewhere, fears that the euro had got ahead of itself were proven true.

TD Securities noted yesterday that EUR/USD was looking vulnerable to a move lower and that breakdown finally seems to be taking place as North American markets pick up speed today.

Investors covered EUR shorts in the wake of last week’s ECB meeting and are probably more neutrally positioned now.

Signs of the EUR’s broader downtrend resuming should boost renewed speculative short interest in EUR/USD.