Loonie/BOC

Loonies time has come to stop the fade. Time for 1.15, GOLD and OIL consolidating. Inflationary market trends consolidating. NK causing problems. ZIRP about to end. Excess liquidity removed from the system. All of it points to a dollar rally versus commodity currencies.

There was a small showing of dollar strength today but it was minor and could not be sustained. I think that this is an indication that dollar strength is not going to happen just yet and when it does it may not be as strong as in the past.

With the probably BOJ decision to increase interest rates (it might be appropriate to say start having an interest rate), and with some interest being shown in substituting the euro as the benchmark currency, the dollar may have a harder time than in the past mustering strength.

There may also be some political considerations, beyond the economic ones that we normally consider. The US overly aggressive stance, as far as many countries are concerned, as well as recent action without appropriate justification, may also be a factour. While this may not be economic, the taint may extend into the economic realm. It is not necessarily a matter of whether these beliefs are justified or not, the fact that they exist is all that matters. At present the US is under a cloud and this may be the reason why in the last few months there were several news releases which should have been dollar positive and either had no effect or were dollar negative instead. In other words, there may be an image problem which will either prevent lasting dollar strength at this time, or severely limit it.

How about Gold at $642 during the NY session?? Up over $15....I don't think this could be short covering....


Thanks,

Nader

I got out too early on the loonie, could have made an extra 20 pips. But thats life.

What exactly does NK have to do with usd/cad? i'd say potential instability and brewing tensions would hurt usd/chf...?