No trend in the currency market is as strong as the recent downtrend in USD/CAD. Today, the Canadian dollar raced to a 37 year high against the US dollar on the back a new record in oil prices.
We have long said that 95 cents is not only possible but probable in USD/CAD and now that this level has been achieved, the next logical target is 90 cents. Further gains however could be difficult as $100 oil will be a difficult psychological barrier to surpass. Even though we remain bullish the commodity currencies, the moves in the Canadian dollar and oil have become very extreme and are begging for a reversal. Meanwhile the Australian and New Zealand dollars are also stronger today thanks to $5 rise in gold prices and better than expected New Zealand trade deficit data. If commodity prices continue to rally, so will the commodity currencies