Whats with CAD?

USD CAD is climbing up on some "bad tax" issue?

Can anyone explain?

11/01 02:55 DOLLAR-CANADA: Extends its react rally to currently trade around
C$1.1313 in early European trade. Rate had been slow to react to late
Canadian news (after Canadian markets had closed), Canadian FinMin
Flaherty announcing plans to tax income trusts. This comment is expected
to weigh heavily on the Canadian stock market when it opens later, hence
the current run on the Canadian dollar. Dollar-Canada initially pushed up
from Asian lows of C$1.1211 to C$1.1238, making a brief corrective
pullback before further buyers emerged to spike rate up to overnight
highs of C$1.1263. As mentioned above, Europe has extend the move but
currently seen meeting decent resistance from reported offers placed
between C$1.1320/25. A break above this latter area expected to boost
bullish hopes and open a move on toward C$1.1360. Note that this proposed
law has yet to be passed (Canadian PM Harper said during his election
campaign that he would not enact such a tax), and if it did get approval
the tax on existing fund will only be implemented from 2011, while new
funds would be taxed as of 2007.

Basically, it means new tax legislation has been introduced taxing dividends of income trusts etc. The fallout means that canadian assets arent as attractive to global investors because of the tax burden. Consequently, there will be a reduced demand for canadian dollars, which would of been purchased so that these guys could of invested in CAD assets. Hence the fall in the canadian dollar.

Anybody know how this will play out when the US market opens??


Rusty

the taxation is supposed to hurt the cad stock market. plus, cad fundamentals are weak all around ie - no rate hikes in near future and price of oil down, imho. personally, i don't trade cad because it is a dog, you need a lot of patience to play it.

I like the way its slow

Franky and dsb104

Very helpfull posts. Thanks

hi all,

just some technical view...there r same pattern at daily & H4 timeframe...anything/everything is possible....

regards, (trade at yur own risk)

candlepower

First, this TAX thing is like an economic suicide. they really want to kill their economy?

This leads us to the Eliot Wave chart Candle posted. SHOULD their lawmakers decide not to go with this tax proposal, CAD will get some ease and USDCAD would drop as shown.