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Currency Trading: Are gains left in the Canadian loonie?

Posted March 22, 2008

"In November 2007, the loonie spiked to a record $1.10 on soaring commodities prices. Recently, however, the loonie has been shedding its strength." — Sally Limantour

by Sally Limantour

Baltimore — (TFN): The Canadian dollar is affectionately known as the “loonie” because of the picture a loon on the coins. And today’s chart is FXC, the Canadian dollar currency trust ETF.

For over 40 years the Canadian dollar traded below par with the U.S. dollar (CA$1 was less than the value of US$1). In November 2007, the loonie spiked to a record $1.10 on soaring commodities prices.

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Recently, however, the loonie has been shedding its strength. On Wednesday, the Canadian dollar had its biggest single-day plunge in nearly 46 years, falling more than 2%.

Canada, known for its vast natural resources, has a strong tie to energy and commodities. With the setback in gold, silver and other commodity prices this week, the loonie became vulnerable.

Longer term, FXC has good monthly support at 95.00-95.50 and should hold this level, making for a potential buying opportunity once the loonie finds support. View a chart of the Canadian dollar currency trust ETF and find more from Sally.

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