The Canadian dollar is making a comeback, and with a vengeance: USD/UCAD is now trading around 1.0975, falling sharply from the highs seen earlier in the week and making a complete U-turn.
Here are 4 reasons, followed by the chart:
- USD sell off: The US dollar is sold off across the board on an almost simultaneous release of an announcement on stimulus in China and also a report that is likely to leave the wording regarding interest rates intact – a “considerable†time. Here is a preview of the FOMC meeting.
- Strong Canadian manufacturing sales: a rise of 2.5% beat expectations of 1.1% for the month of July. In addition, the figure for June was revised to the upside: from 0.6% to 0.9%.
- Bounce in the price of oil: After long days of falls in the price of both Brent and WTI oil, we are seeing a bounce, perhaps related to a brewing storm in the Atlantic. Here is more about oil.
- BOC optimism: The governor of the Bank of Canada, Sttephen Poloz, says that the Canadian economy is beginning to see early signs of export recovery and that a “natural sequence we have been hoping for is under wayâ€.
Here is a chart of USD/CAD, showing the rise and the fall of the pair. For more, see the C$ forecast.
