british pound versus the canadian dollar prediction 2011

british pound versus the canadian dollar prediction 2011 : The Canadian dollar continued to appreciate against its U.S. counterparts, with the exchange rate advancing to its highest level since May 2008, but the dollar-loonie looks poised for a corrective retracement as the pair finds support around the 78.6% Fibonacci retracement the 2007 low to the 2009 high around 0.9900. The USD/CAD remains nearly 40 points lower on the day after moving 70% of its average true range, and we may see a short-term reversal unfold going into the Asian trade as the relative strength index bounces back from oversold territory.

In turn, the dollar-loonie should work its way back towards parity, and the Canadian currency may face increased headwinds over the near-term as the Bank of Canada talks down speculation for a rate hike in the first-quarter of 2011. According to Credit Suisse overnight index swaps, investors are pricing a 12% chance for a 25bp rate hike later this month, and interest rate expectations may weaken further over the coming months as the BoC lowers its outlook for growth and inflation. Read More....

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