Daily December Canadian Dollar Pattern, Price & Time Chart
The December Canadian Dollar is trading sharply lower at the mid-session after the Bank of Canada cut its economic growth outlook and altered its position on withdrawing stimulus in today’s monetary policy statement. Based on the central bank’s assessment of global economic growth,Canada’s economy may take longer to return to its capacity. The BoC is basing its conclusion on a possible “brief” European recession triggered by the debt crisis and a reduction of exports caused by weaker U.S. economic growth.
While the BoC monetary policy announcement may have triggered the break in the December Canadian Dollar, a report that the European finance ministers canceled Wednesday’s scheduled summit helped fuel an even sharper decline. Commodity and equity markets fell sharply lower as jitters hit the risky asset markets. Traders aren’t necessarily afraid of the risk, but the lack of clarity. It’s the uncertainty of the situation that is causing them to pull out of the market and into the safety of the U.S. Dollar. The BoC seems to feel the same way as caution seems to be the theme expressed in this morning’s report.
Technically, the December Canadian Dollar is poised to form a daily closing price reversal top. Based on the short-term range of .9367 to .9996, expectations are for a 2 to 3 day correction into at least .9682. Further selling pressure could trigger a decline into a 61.8% retracement level at .9607. Uptrending Gann angle support makes .9682 to .9667 a possible support cluster. Looking at the way the market reacted as the Loonie approached parity; it looks as if traders have made $1.00 the line in the sand.
