The Canadian dollar peaked on 6/1/09 at 92.75 (basis September contract).  On 6/5/09 we received a longer term sell signal. As the C$ peaked, we saw commodities peaking out soon after in early to mid June.

Currently the C$ appears to be basing, but it could be a short term correction before making the next move downward.

If the market breaks below 85.51, then the next support level would be 84.31.

If the market holds the current level, the initial resistance level is 86.23 to 86.50

Today Australia reported their Q1 GDP as an unexpected increase of 0.4%. According to a Bloomberg survey, economists were expecting a decline of 0.2%. If the GDP would have been negative, Australia would have technically fallen into a recession with two consecutive negative quarters.

 A major increase of GDP came from exports.  China is Australia's largest trading partner. Its important for China's economy to stay strong. In recent weeks the AD has increased along with commodity prices. Some of the growth also came from household spending due to the government's stimulus policies. It is uncertain how well the Australian economy will grow in the second quarter as the stimulus policies may not have  the same impact. There is talk that rates will still decrease in Australia.

However, business investment is still declining and unemployment has increased to 5.4%

Now Australia can join the elite club of countries that have not fallen into a recession such as China  with a 6.1% Q1 GDP and India with 5.8% GDP. Perhaps this will be the beginning of a trend for other countries to improve their GDP's. As the emerging markets grow and become wealthier, Australia maybe well positioned to enjoy some of that growth for years to come.

On 4/29/09 we received a buy signal in the Canadian $ (CD) futures contract (basis the June contract). From our signal the market rallied about 400 points to its high on 5/11/09. As a commodity related currency, its not a surprise to see it bottom in early March and then rally along with many commodities.

On 3/9/09 the market bottomed at 76.66 and found a recent high on 5/11/09 at 87.17, a 13.7% rally.  During this two month period we had a few signals to go long.

On 5/13/09 we received a sell signal in the CD. Whether this is a short term consolidation or something longer in term will depend on exterior components such as the move in commodities. The end of last week witnessed some consolidation in the energy and grain markets.

There is support in the 85.60 to 85.00. If this level is broken, the next level of support is 83.50. We do see a major resistance in the 90.00 to 95.00.