The Canadian dollar is unlikely to make another move towards parity with its U. S. counterpart anytime soon, and will more likely see some weakness heading through the summer, according to a currency analyst.
“We remain, both from a fundamental and from a technical perspective, bearish on the Canadian dollar going forward,” said Matthew Strauss, senior currency strategist with RBC Capital Markets in Toronto, “at least for the next few months.”
Strauss said recent strength in the Canadian dollar was largely the result of technical signals and position squaring. However, “from a technical perspective, the rally that we’ve seen in the Canadian dollar has run out of steam,” said Strauss.
Despite expectations for an increase in Canadian interest rates from the Bank of Canada, and strong domestic economic data, Strauss expected the uncertain global economic situation would weigh on the Canadian dollar
Strauss placed the next support for the currency at US95.15 cents, with a move below that likely setting the stage for a move towards the next support at US93.64 cents. “If we break below that level, it could open a wave of significant Canadian dollar weakness,” said Strauss.