Canadian Dollar Extends Advance, New Zealand Dollar Loses Ground

The Canadian dollar rallied against the greenback for the third day, with the USD/CAD slipping to a fresh yearly low of 1.0592, while the NZD/USD pared the overnight advance after stalling at a high of 0.7161.

The Canadian dollar rallied against the greenback for the third day, with the USD/CAD slipping to a fresh yearly low of 1.0592, and the pair may continue to retrace the advance from the previous year as investors raise their appetite for risk. The dollar-loonie has moved only 50% of its daily ATR, which could lead the pair to trend lower over the next few hours of trading as oil and global stock prices push higher however, as the RSI approaches oversold territory, we may see the pair hold a narrow range throughout the day following the sharp the decline from earlier this week. At the same time, a break below 1.0580 should expose the 9/8/2008 low at 1.0550, and the U.S. dollar may continue to weaken against its higher-yielding counterparts as market sentiment improves.

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The NZD/USD pulled back after reaching a fresh yearly high of 0.7161 during the overnight session and slipped to a low of 0.7087 during the early U.S. trade, and the pair continue to trade above 0.7100 over the next few hours of trading as the 30-minute RSI bounces back from oversold territory. However, as the daily relative strength index holds at 68, there remains room for the kiwi-dollar to push lower as the intraday move remains below the ATR but nevertheless, the rebound in risk appetite may continue to support the rising trend in the pair as investors hold an improved outlook for global growth.

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[I]To discuss this report contact David Song, Currency Analyst: <[email protected]>[/I]