CAD Bounces on Commodities Bounce Back

Tuesday, November 03, 2009, 07:28 GMT

Loonie bounced back from the 1-month low after gains in commodities, mainly crude oil touching the $80 mark, against the Greenback. Support also came for the rally as it is mainly fuelled by the ‘better than anticipated’ data on manufacturing and home sales. Gains are, however, very difficult to sustain on account of comments made by the Federal officials that the US economic recovery is still far from robust. The Loonie is currently trading at 1.0780 against USD from 1.0848 on 30th Oct.

Consensus is that it is favorable to buy USD for long positions as the CAD rally is based mainly on the appreciation of the price of Crude Oil. In October, US manufacturing also expanded at a fast rate, the fastest in the last 3 years, pushing Loonie northwards as that will create a fresh demand for Canada’s export oriented economy. Having Crude as the main export item, CAD gained against all of its 16 counterparts.