Loonie ... the infamous USD/CAD

Mmmm. To me, technical indicators all represent attempts to spot patterns and predict the future on the basis of the past. Seems to me people are much better at spotting patterns than computers are, and can take a wide variety of external factors into account, aka fundamentals.

However, to the extent that technical indicators are excellent predictors of what technical traders will do, they tend to be self-fulfilling prophecies, so I guess they work, on the same basis as placebos.

Am going to bed for the weekend with a small chunk at 1.0890 and a modest target of 1.0907; won't commit anything big until ... well, until my judgment tells me it's right. I don't have a computer that does judgment.

First discovery in researching GBPCAD on IB: currently a 7-point spread. I can often do better making my own crosses, plus I get to pick 2 different buy-ins.

Shorted GBPCAD at 7 pips anyway, made 32 pips in 15 minutes.

Happy weekend everyone, and may the rest of May be kinder to us longs.
 
Quote from gspaulsson:

In the meantime, USDCAD continues to astound: now it's below last year's low and in fact lower than it's been since 1978:
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Where do you get that information from? I was living in Canada then and the CAD was worth more than USD in the early 80s. Same for the NZD and AUD.

In 1988 I would drive across the border to Seattle and go shopping where they would take CAD at par.

Best regards,
MK
 
Quote from Buy1Sell2:

Based upon this current weekly Canadian futures chart, I have remained long the CD futures (short US). We are at a point on the daily where it is critical that we continue to move upwards or the potential of a bearish divergence exists. I will monitor closely. Current unrealized profits are around 460 pips per contract. Staying long for now. :)
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Currently ahead here 547 pips per contract ($5,470). At the moment, I can't see any technical reason to get out. (Technicals are all I use). There should be a bit of pullback as we are overdone this week on the current weekly bar, but unless I see an obvious reversal, I will stay long (short USD).
 

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Nice going Buy1Sell2 - Great ride you are on there.

I just trade with the trends on moves like these. My view is that FOREX is slightly unique compared to many other markets. They usually trend much further then I would expect them to and I believe this is because macro-economics last for long periods and are slow to change.

While gspaul can make great fundamental cases for the long side. I don't believe this trend is driven by the chartists. However, the charts are showing a clear and obvious supply and demand. Until the chart shows me otherwise, I'm only looking for shorts and have been getting some good opportunities in the past week. Both in this USD/CAD and also EUR/CAD. CAD is the only major in a strong trend these days so I'm happy to take on more CAD exposure.

Kind regards,
MK
 
Quote from MidKnight:

CAD is the only major in a strong trend these days so I'm happy to take on more CAD exposure.

Kind regards,
MK
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Aussie and Euro are also in strong uptrends from a weekly chart basis--British Pound , not so much amymore. I would look to trade Aussie and Euro from the long side on retracements, followed by renewed strength until the weeklies break down.
 
Quote from gspaulsson:

First discovery in researching GBPCAD on IB: currently a 7-point spread. I can often do better making my own crosses, plus I get to pick 2 different buy-ins.
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I've noticed this as well. You'd think that in an ECN environment such as IdealPro, the spreads on crosses would be pretty much arb'd to their USD constituents. I often find myself doing the same as you, trading the crosses manually, but in the fx futures where the crosses don't exist, I have no other choice anyway.
 
Quote from MidKnight:

Where do you get that information from? I was living in Canada then and the CAD was worth more than USD in the early 80s. Same for the NZD and AUD.

In 1988 I would drive across the border to Seattle and go shopping where they would take CAD at par.

Best regards,
MK
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Fraid your memory is faulty. There is a site out there somewhere that has historical data back to 1950, can't seem to find it at the moment, but conveniently today's Toronto Star published a chart showing prices back to 1976. It's a typical newspaper graphic, with a thick red line for the price, so it's not very clear, but it shows CAD>USD in 1976, then dropping below 90 cents in 78 and staying there until last year. It bottomed at around 0.72 in 86, recovered to 0.89 in 91 or 92 (it's hard to tell), then dropped to the all-time low in 2002.

The late 70s, if you'll recall, were the time of the OPEC oil-price spike, although Canada wasn't a big player in oil yet.
 
A brief history of oil prices

I found historical data going back to 1949 on http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp, showing real and inflation-adjusted (to 1/2007) prices. Prices are annual averages.

It divides into 5 periods:
(1) price stability, 1949-1973
Average IAP $18, range $15-$21, average y/y = -0.76%
(2) OPEC oil shock, 1974-1981
IAP zooms to $66, average y/y = +21%
(3) Fallback, 1982-1986
IAP drops back to $22, average y/y = -18%
(4) New stability period, 1986-1999
Average IAP $21, range $13-$29. average y/y = +0.91%
(5) Resource-price bubble, 2000-2006?
IAP rises to $58, average y/y = +26.14%

Average y/y, 1950-1999, was 1.42%

On this pattern, we can expect a new fallback through
2010, with the annual average IAP dropping to the mid-20s
and real prices in the low 30s. That means we might see spot prices as low as $20 again. I know it's hard to imagine, but it was in 1981 too.

Of course world GDP is now growing at around 5%, so "price stability" won't be quite as stable as before. Demand for oil should lag that, since as countries develop they generally become more energy-efficient. China and India will be buying a lot more cars, but offsetting that, the search for alternatives continues and we can expect to see efforts to reduce consumption through "green" taxes, moral suasion, continuing movement from oil to cheaper natural gas for heating, maybe the end of the SUV fad and an new fashion for hybrids and diesels, continuing American attempts to reduce dependency on "foreign" (=Arab) oil, etc. Supply should remain abundant (they can pump it as fast as they can sell it, even after peak oil, until major reserves start running dry), but diminishing marginal returns will begin to set in as expensive bituminous oil and other marginal sources contribute more to the pool. So the new "price stability" period starting in 2010 should really be a period of moderate price growth, maybe 3-4% real and 6-7% nominal.

A price drop back to the $20-$30 level would have a disproportionate effect on USDCAD since it would make Alberta oil noncompetitive. If it unfolds that way, and is accompanied by a general unwinding of the resources boom, expect to see USDCAD back at $1.40 or maybe higher by 2010.
 
Oil is scarce and we do not have any new major big oil discovery in this decade yet. Unlike US with plenty of oil reserves which could last it for maybe 50days? without any oil import, China does not have significant oil reserve yet. I read from news that China is building HUGE oil reserve across the country and going to import PLENTY of oil at all cost. So the oil will continue to climb even in recession.
 
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