By: Rab Jafri
Fundamentally, the Canadian Economy looks on solid ground. GDP grew at an annual 5 percent in the fourth quarter of 2009, which was led by vigorous domestic demand and further recovery in exports. Unemployment has dipped from 8.5 to 8.3 percent. Unlike, U.S., Canada has not experienced the systemic failure of its financial institution.
There have been no crippling mortgage meltdowns or banking crises north of the border, where there is greater oversight of mortgages. The central bank has acknowledged that recovery is in progress, and that inflation has been “slightly firmer than projected”. Bloomberg surveys estimates show that B.O.C could hike as much as 75 basis points by Q3 of 2010.
USD/CAD has formed a descending triangle, breakout towards the downside looks eminent. Look to buy the Canadian Dollar, and hold it till the pair reaches parity –
USD/CAD - Support 1.0240 breached – and descending triangle formation from the weekly charts suggests that the downward momentum could be strong.