Canadian Dollar Stays Weak As The Year Closes

Trading in the financial markets remained dull in holiday mood. DJIA continued to struggle to find momentum for breakout and lost -117.11 pts, or -0.66% overnight to close at 17603.87. S&P 500 lost -15 pts or -0.72% to close at 2063.36. Gold weakened notably to around 1060 level but is held inside the range established earlier this month. Crude oil also dropped mild and is hovering below 37 handle but there is no clear downside momentum yet. Dollar index, on the other hand, is also hovering in tight range above 98.

The economic calendar remains very light this week. US pending home sales dropped -0.9% mom in November versus expectation of 0.6% mom. That triggered little reactions in the markets. As for today, initial jobless claims from US are expected to rise to 274k in the week ended December 26. Chicago PMI is expected to rise to 50.4 in December.

Overall for the month, Canadian dollar is the worst performing major currency as dragged down by weakness in Crude oil. Meanwhile, Euro is one of the strongest ones after ECB meeting. EUR/CAD rebounded strongly in December, from the month’s low of 1.4023 and is trading firm above 1.5 handle. The development affirmed that the medium term pull back from 1.5585 is finished at 1.3019 and the up trend from 1.2126 long term bottom is still in progress. We’d expect a break of 1.5585 resistance in 2016 to push the cross to 100% projection of 1.2126 to 1.5585 from 1.3019 at 1.6478.


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