Canada’s dollar is poised to rally against its U.S. counterpart after failing to depreciate through a pivotal price level, according to JPMorgan Chase & Co.
The inability of the currency to close weaker than C$1.0055 per dollar twice this week, after reaching C$1.0063 on an intraday basis on May 9, signals it will strengthen, Niall O’Connor, a technical analyst at the firm, wrote in a client note. Canada’s dollar, nicknamed the loonie, has strengthened 2.4 percent against the U.S. currency this year after losing 2.3 percent in 2011.
“Canada has held important levels for the second time this week, suggesting that a deeper pullback in the move is ready to develop,” New York-based O’Connor said in a telephone interview. “Canada is exhibiting bullish economic fundamentals relative to the U.S. and commodity currencies that are giving it safe-haven status.”
The Canadian currency gained today versus most of its major peers after employment in the nation climbed in April by 58,200 jobs, almost six times faster than economists forecast. The loonie strengthened 0.3 percent to 99.89 cents per U.S. dollar after weakening as much as 0.3 percent earlier.
If the currency appreciates beyond 99.25 cents, it will probably gain even further, O’Connor said.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
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