Saxo TV: The Loonie's Crazy DeclineMichael O'Neill
The US Dollar has gained nearly 10 percent against the Canadian dollar since touching 0.9670 in September, 2012 and the big question is: Is the USDCAD rally nearing its 'best before date' or are we still in the early stages of a much bigger USDCAD rally?
Michael O'Neill says last week’s Federal Open Market Committee statement and subsequent press conference by chairman Ben Bernanke put “paid” to speculation that the Fed would soon be embarking on a stimulus reduction programme which confirmed that US interest rates would rise at some time in the future. Treasury traders reacted as if the future was now and equity traders tanked indexes, globally. The US dollar spiked higher versus almost everything, including the Canadian dollar.
The nearly 10 percent rise in USDCAD mirrored the fall in commodity prices which were undermined by fears of an economic slowdown in China and more recently the perception of a slowing in demand due to rising US interest rates.