By TraderVox.com
Tradervox.com (Dublin) – The loonie has gained against it many of its counterparts as US stocks and raw materials rose. This has boosted the demand for commodity related currencies such as the Canadian dollar. The rise came as the Standard & Poor’s GSCI Index of 24 raw materials rose 2.3 percent. The surge was supported by the Reserve Bank of Australia decision to keep interest rates unchanged. Most investors and analysts have taken this as a sign of emerging stability in global economy.
Talking prior to the US election results, John Doyle, the Director of Markets at Tempus Consulting Inc in Washington, said that regardless of who wins the election, the US economy will outpace most other economies around the world and this will boost the Canadian dollar. He also noted that the failure if the RBA to cut interest rates have boosted the demand for commodity related currencies.
The Canadian dollar advanced together with other commodity related currencies as the Standard & Poor’s 500 Index of shares rose by 0.8 percent. In addition, futures for crude oil advanced by 4.2 percent to $89.22. This is the highest level it has been in two weeks. Crude oil is Canada‘s large export commodity to the US.
According to George Davis, a technical analyst at Royal Bank of Canada in Toronto, the Canadian currency may strengthen to 98.46 cents per US dollar it breaches Friday’s high of 99.21. In a note to clients, Davis noted that the loonie will find support at 99.42, 99.62 and 99.84. Davis also recommended that traders buy dollars on dips and place their stop-loss at 99 on an hourly closing basis.
The Canadian dollar strengthened against the greenback by 0.4 percent to trade at 99.21 cents per US dollar at the close of day yesterday in Toronto. The Canadian dollar had weakened to its weakest level in three months last week.
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