Canadian Dollar continues to lose ground
Over the last couple of months the US Dollar has recovered almost 6 cents against its neighbour in the North (USDCAD). As is typical of these movements, it’s been a little bit of a rollercoaster with gains followed by seemingly sharp losses, but the thing to note here is that it is in the habit of bouncing back fairly strongly after every such reverse. Policy here should be to buy the dips, as we look towards a test of the 27 June high of 1.3385. The pattern is fairly similar to what we are seeing against Sterling (GBPCAD), but there is less reason to buy Sterling than US Dollars until the picture becomes clearer. We like the way USDCAD is behaving and believe that in the current climate there is room to extend further gains to an eventual test of the 1.38 level. The wheels of USDCAD are not really built for speed though, so this is much more of a slow-burning investment that should eventually pay off.