Loonie ... the infamous USD/CAD

I think we are now seeing USDCAD recovering at the rate of about 4 pips a day, within a 75- or 100-pip channel.

Resource prices will drop if the US goes into recession. Oil, long-term, goes up at the rate of about 2% a year in real terms; the 40% annual increases of the last 3 years are anomalous - a bubble that has to pop. "Peak oil" has been predicted over and over again, but even if it is only 4 years away, that has very little to do with the availablity of oil in the short to medium term. Whether we are using up oil faster than we are finding it has nothing to do with whether there is still oil to be pumped from the major reservoirs. When the Saudi oilfields run dry, then there will be a problem. As long as they still contain oil, that oil can be pumped at whatever rate the Saudis choose to pump it.
 
Growth rate is slowing, there is a housing slump, there is a negative savings rate and a lot of money is invested in assets that have been growing far too quickly to be sustainable - 40-70% a year. Banks, which used to rely on mortgages as their main cash cow, are now making most of their money on credit cards, which are unsecured credit. It all looks like a house of cards to me. The Economist has been speaking for several years now about a "worldwide asset value bubble". All bubbles pop in the end, and when this one does, a lot of dominos could fall.

Also we've had a 5-year bull market, and all good things must come to an end.

The USDJPY/AUDJPY/NZDJPY carry trades are classic bubbles. USDJPY carry traders got burned with the wind-down in February, and currently we have a longer and higher carry trade than back then. It's long overdue for an unwind, yet the optimists are still piling in long at 123+. I shorted at 122.72, we'll see what happens. I think I could make 500-600 pips in the next month. It's insane to risk that much capital loss for the sake of a 4.75% interest rate differential, but people do it.

Anyway, I said IF there's a recession, the resource-price bubble will pop and the loonie will drop.

I agree with a USDCAD recovery - some negative Canadian news starting to come out now, and Dodge says in today's Globe that he's worried about the high loonie, but not enough not to raise rates in July. I think as long as the news is ambiguous and oil is still nudging $70, it won't roar. I think it will sputter - up to 1.07, maybe 1.08, then back to 1.06, maybe even 1.055, with the support level going up at around 4 pips a day.
 
Hi Ho

Back from vacation ... seems there has been some heated debate and seems USDCAD dipped into 1.05 area.

Well since I have been away it seems an upward support trend has been forming and I noticed that I was filled at 1.0620 earlier today.

Well, though commodity prices are not settling down this summer lets hope the Canadian domestic consumer economy fizzles out ... otherwise all us USDCAD longs are going to eat it all the way to par.

Some forward looking Canadian numbers numbers in about 3 hours and I am up 30 pip it seems

Here is my short term outlook

open 1.0620
target 1.0760
stop 1.0610

I am looking at higher highs and higher lows in a recent channel so I am thinking 1.0760 is a decent target ... my exit earlier if price action does not seem to allow for this.

Good Luck and Good Trading and Goodwill Hunting
 
Quote from usdoutlaw:

Hi Ho

Back from vacation ... seems there has been some heated debate and seems USDCAD dipped into 1.05 area.

Well since I have been away it seems an upward support trend has been forming and I noticed that I was filled at 1.0620 earlier today.

Well, though commodity prices are not settling down this summer lets hope the Canadian domestic consumer economy fizzles out ... otherwise all us USDCAD longs are going to eat it all the way to par.

Some forward looking Canadian numbers numbers in about 3 hours and I am up 30 pip it seems

Here is my short term outlook

open 1.0620
target 1.0760
stop 1.0610

I am looking at higher highs and higher lows in a recent channel so I am thinking 1.0760 is a decent target ... my exit earlier if price action does not seem to allow for this.

Good Luck and Good Trading and Goodwill Hunting
More...

Target is hard to be hit.
 
I'm using the IB alert and adjustable stop system - submitting a trailing stop at 1.10725 trailing at 10 pips, tightening to 1 pip at 1.0750. I was in at 1.10650. Looking good so far.

I think the loonie's run out of good news, and was overbought on the last batch of good news anyway. Like last summer, when it bottomed out in June at 1.0939 and was hitting 1.14 again in July, I'd expect to see a major recovery, especially as tourism is hit by the high loonie and high gas prices, and M&A is on the back burner. Mind you, with oil almost at $70 again, that could strangle it some.
 
OK so 1.0760 was a pipe dream ... of course I missed my opportunity at todays high after that terrible wholesale sales number.

But here is the thing the LEI (which I think is not too important) was not that much better today thus means to me expectations are slowing and the wholesale sales dramatically dropped.

This could be for two reasons:

1- summer is terrible for retail
or
2- the Canadian domestic economy is slowing down

ok it might as well be reason 1

but consider that the Canadian population is much smaller than the US. Let's compare it to the state of California. Canada has roughly 33 Million and California has 36mm.

Ok to keep it short what I am saying is that the economy of Canada should not be such a powerhouse and that even though their export situation and commodity situation is crazy good right now does not necessarily mirror the domestic situation. So the miners, drillers, and lumberjacks are making money ... does that trickle down to the rest of the population ... wait I mean trickle up. Ahh paradox. Basically i do not think Canada can keep spending high as a domestic engine of growth because its such a small country. Thus interest rates will probably not go higher ... yada yada yada

and of course I could be wrong :D
 
oooh almost at my 1.0760 target

I just closed my position @ 1.0750

130 pips not bad

Looking to reposition a long position if the price falls into the mid 1.0600s

not sure if a short play is in order when considering recent weaker than expected Canadian numbers and a stronger Philadelphia Fed Number this morning

maybe I will get back in next weekvsince there are no more US or Canadian numbers tomorrow
 
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