The US dollar continues to show signs of strength against the Canadian dollar, as we rallied slightly during the trading session on Monday. I believe that we will continue to go higher, but we are probably a bit extended at this point. If you are not involved in this Parry and, I suspect the best way to get involved is to wait for pullbacks that you can take advantage of as they should offer value. While the oil markets have been very resilient, the Canadian dollar continues to fall based upon fundamentals with the Canadian economy. We also have a strengthening US dollar due to the Federal Reserve looking to raise interest rates over the longer term, and therefore think that we will continue to be bullish of the greenback for the near future, especially against the Canadian dollar which must deal with several issues.
The Toronto housing market is most certainly in a bubble, and of course the Bank of Canada had to raise interest rates and an attempt to cool down Canada’s most important region. Because of this, it’s likely that the interest rate hikes are not likely to continue, and the Bank of Canada has recently even suggested that they are not “automatic.” It makes sense that we rally now that this has been acknowledged, and I think that we will go fishing towards the 1.30 level above, which of course is a large, round, psychologically significant and important number. Pullbacks offer value, especially near the 1.28 handle, and of course the 1.27 level after that. I have no interest in shorting, I believe that longer-term uptrend momentum should continue, and that we will continue to see volatile yet positive momentum. It’s not until we can break down below the 1.24 level that I would be concerned about the uptrend.
Written by FX Empire