The Canadian dollar will continue to challenge levels close to parity, but offers poor value at current levels

The Canadian dollar held firm on Tuesday and again challenged levels below parity against the US dollar. The latest spike stronger followed a fresh surge in oil prices to record levels on rumours of an Iranian production cut. The Canadian dollar briefly pushed to highs around 0.9985

The currency was unable to sustain the gains and weakened to 1.0055 in early Europe on Wednesday as the US currency strengthened while oil prices retreated from peaks. The Canadian currency was still proving resilient and strengthened back towards 1.0025 later in European trading. The Canadian currency also secured a significant advance against the Australian dollar as there was a divergence in commodity currencies.

This suggests that confidence towards the North American economy has improved. Nevertheless, the Canadian dollar is likely to hit further tough resistance towards parity with the threat of a retreat to the 1.02 region over the next few days.