Canadian dollar pushes to three-and-a half month high vs US dollar but under-performs broader market

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Published on Tuesday, 21 August 2012 13:15

Written by Rob Samson

International Money Transfers at our sister site

News and views on today's performance of the Canadian currency as we head into the North American open.

The Canadian dollar (Currency:CAD) has made the most of a pro-risk environment on the global market place.

We see the euro as being the star performer today as a slew of developments boost investor appetite.


These include China’s liquidity injections, the RBA’s confirmation that the SNB had diversified into AUD, an easing in commentary from Europe regarding concessions for Greece, supply pressure on commodities and speculation and excitement over the event risk beginning on August 31st with Chair Bernanke’s Jackson Hole speech.

"CAD continues to strengthen, reaching a new three and a half month high and entering the NYC session up 0.3% since yesterday’s close. Technicals are supporting the move, with the RSI at just 30 leaving lots of room for further CAD appreciation," notes Camilla Sutton at Scotiabank.

That said, "The CAD, however, is the under-performer among its risky G10 counterparts, allowing a bit of catch-up after being an out-performer since the beginning of the month," notes Shaun Osborne at TD Securities.

Indeed, the Canadian currency certainly is one of the star-performers on the markets.

Here Camilla Sutton looks at the factors backing the currency:

"The intraday chart suggests that the gains began with the release of the RBA minutes; most likely as the central bank confirmed that there had been SNB buying of AUD, which has been widely speculated as one of the positive flows into CAD over recent weeks as well.

"The most recent rally in risk assets began at the end of July, as ECB President Draghi commented that the ECB would do whatever it takes.

"For CAD, the ability of central banks to reduce tail risk, thereby pushing vol to extreme lows and supporting risk assets has been an important theme. The other major CAD supportive themes are its Triple A sovereign status, improving US data and a hawkish central bank."