After consolidating for the past month, USD/CAD fell over 100 pips today to hit a new 6 week low on the back of higher oil prices and stronger housing numbers. The technical break puts 1.0340, the 30 year low for USD/CAD in scope and there is a strong chance that level will be challenged over the next few days.
Bank of Canada Dodge is scheduled to speak tomorrow, but we do not think that he will diverge much from the topic of “Transparency.” Housing starts increased a whopping 5.1 percent to 226.5k in August while new housing prices increased 0.9 percent in July. This offset any concerns that may have stemmed from the weaker than expected trade surplus for the month of July. The New Zealand and Australian dollars also performed extremely well today. Both currency pairs are up over 1 percent thanks to much stronger gold prices and a renewed rally in US stocks. The Reserve Bank of Australia will be releasing their annual report tonight and Australia also has consumer confidence due for release. New Zealand on the other hand only has food prices. The RBNZ rate decision and retail sales are not until Thursday.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com