Yeah that's a strong correlation. I think it points to how much both the aussie and the loonie were exposed to European markets. One thing I'm curious about is how the trading range of both pairs seem to shortening. At the same time the market's reaction to certain fundamentals such as speeches from leaders is not as strong as it was when the trading range was greater. Do you think that this is signaling a possible reversal from risk sentiment to non-risk sentiment?
Being quite the newbie, I do not feel confident that I can speak with authority on risk sentiment yet. Although, looking at the behavior of the pair, I can see your point. Market announcements are having less and less of an effect on the pair.
If this is true, then the question I have to ask is; What exactly will prod the loonie?
I nabbed this from Freshpips.
<<babypips won't let me post URLs yet so here is my attempt to fake it out>>
Looks like Adam Button of Forex Live also thinks that the Loonie is ripe to break out.
I'm checking to see if I can find additional data to back this one up.
What should we be looking for to indicate the direction the loonie will take? Can we corroborate Adam's claim that commodities will be limp in 2012, with a rate cut from the BOC? Should the bias be long?