Canadian Dollar (Loonie) becomes stronger versus US dollar. (USDCAD)

USDCAD was declining from 1.0777 (that is 5 Feb, 2010) as compared to the low of 0.9985 last week. Because of the higher prices of commodities the Canadian dollar rose to parity with the greenback last week. The Canadian dollar fell sharply because of the disappointing employment report which was showed the Canadian economy added 17,600 jobs as against expectations of 26,000. After released this data last week, the USDCAD has settled into declining channel.


Rising prices of commodities and oil prices, the Canadian dollar has crossed parity with the US dollar for the first time from last two years.Becuase commodities and crude from bulk of Canadian economy and its exports. As the commodities and oil prices rise the investors think that the US greenback will strengthen on positive economic news.

The Canadian dollar had hit the historic high of 1.10 percents US against the greenback in the year of 2007.Then it had dipped more than 75 percents US last year as the global crises deepened.

On Monday last week, the Bank of Canada’s quarterly business outlook survey said that companies on balance expect sales to pick up and they are planning to boost investment spending and hiring. Canadian Finance Minister Jim Flaherty said the rise by the Canadian dollar has been “relatively orderly” and business has been able to deal with its climb to around parity with the US dollar. Canadian housing starts were at a rate 197,300 in March, down from revised 200,400 in February, while economists expected 200,000.

Statistics Canada Tuesday reported that Canada’s merchandise exports rise 2.8 percent in February, on the strength of industrial good materials. The Canadian dollar to its strongest level in 22 months against the US dollar. Economic optimism and expectations forecast the Bank of Canada could begin raising rates as early as June.

Today, the US released report on initial jobless at 484,000 (earlier 460,000) which was above the expected 439,000.This is positive for US dollar and negative for the loonie.

On technical point of view, The USDCAD having support at 0.9972 levels. The next support of USDCAD is 0.9820, which was the low of 29 May 2008.The resistance of USDCAD is around 1.0065 and the second resistance is at 1.0105 which was July’s 2008 high.