The North American currency pair, USD/CAD, has rebounded from its recent three-and-a-half year high of 0.9445 to currently trade near the 0.9500 mark. Monday’s elections in Canada have pushed and pulled investors and speculators into and out of the Loonie in this week’s early trading sessions.
The Canadian dollar has been steadily climbing against its southerly neighbor for the past several years, recently touching a 2007 high before traders reflexively pulled down on the CAD amid national elections.
Not only are the elections creating political, and thus economic uncertainty in the hemisphere’s northern giant, but a recent downturn in oil prices are also leaning against the Loonie’s upside movement. The CAD is a commodity-linked currency, highly correlated with the price of Crude Oil. After this morning’s dip in oil prices, brought on by an unexpected jump in US dollar values, the CAD felt downward pressure versus the greenback.
Today’s inflationary figures out of Canada will likely support the CAD’s impending rebound, as both were released even with, or above, market expectations. The Canadian raw materials price index (RMPI) underwent a massive 5.7% monthly jump, obliterating expectations for a 1.9% growth.
This data, coupled with similar inflationary reports, should put higher pressure on the Bank of Canada (BOC) to consider raising rates in the near future. This information should lead to a strong return to bullishness in the CAD for the days ahead.
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Greg Holden is the Chief Market Analyst at ForexYard. Greg uses his detailed knowledge of fundamental and technical analysis to provide some of the leading market forecasts in the forex world today. A guest lecturer at forex symposiums and Chief Editor of ForexYard's analysis center, Greg brings highly detailed and easy-to-use market analyses to his clientele. He has been published on ForexYard's Trading Blog and affiliate websites. Greg holds degrees in Political Science and Economics from Missouri State University, as well as a Masters degree in Middle Eastern History.
