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USDCAD at 1.40 -How Much More?
On Friday USD/CAD took out multi-decade highs, hitting the 1.4000 level as oil prices continued to collapse. The market is now pricing the prospect of recession in the great white north and traders are bracing themselves for a string of possible bankruptcies in the extraction sector as commodity prices drive producers out of business.
In addition to that BOC governor Polosz has floated to idea of negative interest rates in order to stimulate the moribund economy. However sentiment on the loonie has reached such negative territory that the pair is very vulnerable to a big short squeeze and next week Canada reveals it GDP and Retail Sales figures. If the numbers don’t look too bleak and if crude is able to stabilize the pair could actually see a drop towards 1.3700 level as profit taking kicks in