THE TIPSTER | Loonie flies on risk
WIDESPREAD risk aversion during May meant that dollar-Canadian dollar surged higher, as traders bought the US dollar as a means of obtaining a degree of safety against the ructions in the Eurozone. Eurozone concerns had resulted in a wave of buying that lifted the US dollar, and saw the Canadian dollar slump in a similar fashion to most other risky assets during the month. However Canadian GDP and US non-farms on Friday might see the loonie undergo a modest resurrection at the expense of its US cousin. IG Index’s price is Ca$1.0228-Ca$1.0230.
The euro languished around its lows once again as investors were unwilling to buy the single currency when mixed reports came out of the Eurozone about the ECB, which was supposedly about to announce something on bank recapitalisation. The rumour was denied, keeping the euro down. Capital Spreads quotes a price of $1.2530-$1.2531 for euro-dollar
The pound continues to hold above the $1.5645 61.8 per cent retracement level of the entire up move from this year’s low at $1.5240, to the highs at $1.6305, despite a quick peek at $1.5630 late last week. A break below could see a move towards $1.5530. Pull backs are currently finding resistance around the $1.5730 area, with larger resistance at the $1.5770 50 per cent Fibonacci level of the same move. The larger resistance remains at the $1.5840 level, which proved to be such a strong barrier last week. CMC markets gives a price of $1.56771-$1.56782 for sterling-dollar.
Gold-euro is approaching a key resistance zone at €1,255-70. Above here opens the way to €1,300. This trade may work well if commodities keep outperforming the euro. It’s also another way to trade the single currency. Forex.com quotes €1,255.30 – €1,256.00.