USDCAD on a Low since July 2008.

The US dollar plunged to an eighteen months low against the Canadian dollar at 1.0061. The Canadian dollar has been on bullish trend as there has been huge purchase of CAD denominated assets. The value of stocks, bonds, and money-market assets purchased by foreigners rose from 7.75bn to 11.83bn which is also higher than the February figure of 11.23Bn which is a definite plus for Canada. Also unemployment rate of Canada fell from 8.3% to 8.2% which was expected to remain steady at 8.3%. The Treasury International Capital (TIC) long term purchase data for the US which shows purchase of the US assets came far below at 19.1bn from the expected figure of 50.3Bn. These could be signals of the two major purchasers Japan and China looking for alternatives markets like CAD for making their investments purchases. The Consumer Price Index (CPI) which shows change of prices and services purchase by consumers accelerated from 0.1% to 0.7% more than the expected figure of 0.3%. The Lending Index which reflects the combined reading of economic indicators which reflect the overall performance of Canada advanced from 0.7% of January to 0.8% but was below the market expectation of 0.9%. On the other hand the building permits data for the US almost came out equal to the forecast at 0.61m however dropped from 0.62m of previous month’s figures. Producer Price Index (PPI) also drops highest in past 7 months from 1.4% to 0.6% which can be are signs for US recovery measures. However the unemployment claims for US also came out higher than the expectation at 457K from the expected figure of 456K which is an important data that reflects US economic recovery.



From the technical point of view, for the past week it has been trying to face the resistance at 1.0287, if it breaks this resistance level, next resistance could be placed at 1.0362, the near term support is at 1.0148. The crude oil inventories data and the natural gas storage data which affect the currency pair is expected to rise. The Bank of Canada is expected to comment on the overall outlook of the Canadian economy and there is speculation that there might be an interest rate hike. Though USDCAD touched the low of 18 months low, there has been a modest recovery seen for the week giving indication of US markets picking up. If the US continues with the same pace or a better rate of growth, USD can see an uptrend in near future.

Mohammed Rabbani