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Bank of Canada Warns about Canadian Dollar’s “persistent strength”

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Jan 20, 2010.

  1. forextrends24

    forextrends24 New Member

    Mar 27, 2009
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    Today’s sample of Forex Analysis from ForexHound.com

    The USD CAD closed higher on Tuesday after the Bank of Canada left interest rates unchanged but warned about the Canadian Dollar’s “persistent strength” and its possible negative impact on the economy. Since October the BoC has been issuing statements regarding the rapid rise in the Canadian Dollar and its potential detrimental effect on the recovering Canadian Dollar. Warnings have ranged from mild to stern and some have come from Prime Minister Harper. In this case, the BoC set a new schedule for its asset-buyback program as it attempts to boost liquidity and support economic growth.
    This action of flooding the market with cash should be friendly toward the USD CAD.

    Technically, the USD CAD continued to build a support base above the Oct. 15, 2009 bottom at 1.0205. This bottom was made at about the first time the BoC issued a stern warning about the value of the Canadian Dollar. At the mid-session, the market showed some strength by piercing a downtrending Gann angle at 1.0325. This angle drops to 1.0305 tomorrow. Holding above this price could trigger a further rally to a key retracement zone at 1.0484 to 1.0546.

    The EUR USD took a beating on Tuesday. This current round of weakness is being triggered by mounting concerns about Greece’s ability to resolve its debt issues.
    Traders are expecting the European finance ministers to hold their ground and maintain that Greece solves its own problems. This could be an indication that this problem will persist as Greece is having problems reaching a budget solution. In addition, similar problems could crop up with Spain and Portugal.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.

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