Canadian Dollar Falls as Gold Crushed
April 1, 2008 – 8:25 pmvia Canadian Economic Press
11:25 04/01 (CEP News) Montreal – A 4% drop in gold futures and broad-based U.S. dollar rally sparked a selloff in the Canadian dollar on Tuesday. Despite the weakness against the USD, the loonie is higher on other major crosses.
The Canadian dollar was down 0.42 cents to 0.9703 against the USD (1.0304 USD/CAD). Against the euro, the loonie was up 0.42 cents to 0.6220 (1.6077 CAD/EUR). The Canadian dollar was up 1.65 to 98.90 against the yen.
The Canadian dollar was able to hold throughout the morning as commodity prices tumbled and shorts were covered, but it finally broke just after 10 a.m. EDT. CBOT gold is down $36.50 to $885.30 an ounce; Nymex crude is down $1.07 to $100.52 a barrel and copper is down $9.20 to $373.90 a pound.
Technical analysts are closely watching the Canadian dollar’s 4-month low of 0.9636 (1.0378 USD/CAD) for signs of protracted Canadian dollar weakness.
“Until we see a close above 1.0350 (USD/CAD) we are hesitant to believe that the four month range will be broken,” wrote currency strategists at ScotiaCapital in a note to clients. “Accordingly, we continue to view USD/CAD as a range trade, with clear risk for upside.”
