Loonie ... the infamous USD/CAD
- Thread starter usdoutlaw
- Start date
That condo in Hawaii is starting to look even more attractive. With ARMs resetting and the printing presses operating at full speed for the next year, there could be some amazing bargains on the way for us foreigners.
In May 2006 I figured Bush's double-deficit policy would lead to par sooner or later ... it looked to me like maybe early 2008. Then I changed my mind and decided that 13 straight interest-rate hikes had turned USDCAD around and that it would get to 1.17 by the end of the year. I was right on both counts. Trouble is, I also expected it to go on to 1.21 or maybe 1.23 this year. Which proves that if you make enough predictions, some of them will come true.
I now prefer to play short-term trends. And I'm out of USDCAD, because who the hell knows where it's going next. USDJPY looks overpriced, GBPUSD looks cheap, EURUSD might have overshot for now. Get in on the logical side, near the top or bottom of the current trading channel. Keep in mind that logic will fail at least 1/3 of the time and set a stop accordingly. Ride it to somewhere near the other end of the channel, adjusting the stop as you go, and then get out. Typically 2-3 trades a day. Have tried everything, and that's what seems to work the best. Is USDCAD going to .95? .90? Correct back to 1.05? Who knows. Who cares.
I now prefer to play short-term trends. And I'm out of USDCAD, because who the hell knows where it's going next. USDJPY looks overpriced, GBPUSD looks cheap, EURUSD might have overshot for now. Get in on the logical side, near the top or bottom of the current trading channel. Keep in mind that logic will fail at least 1/3 of the time and set a stop accordingly. Ride it to somewhere near the other end of the channel, adjusting the stop as you go, and then get out. Typically 2-3 trades a day. Have tried everything, and that's what seems to work the best. Is USDCAD going to .95? .90? Correct back to 1.05? Who knows. Who cares.
Look for an opportunity to set up shorts if we build value and move below the 1.0250 zone. Target is south of 1.01 dependent on volatility if we do in fact move down ever again.
I still maintain that the high loonie carries the seeds of its own destruction. First it plus the credit squeeze have totally choked off M&A, which was one of the big things that pushed it up. Second, oil is coming off the $84 peak, and in loonies has dropped from $84+ to $79. It had to have been a bad summer for the tourist trade, and with Canadians ordering stuff cheap across the border (L.L. Bean is apparantly swamped with Canadian orders) while Canadian stuff is less attractive down south. Then there's the UAW-Detroit deal which shifts health care legacy costs onto the union and cuts down one of the big advantages the Canadian car industry had, the cheap loonie being another: the Canadian car industry is in trouble now, along with a lot of other manufacturing. The housing slowdown keeps hurting lumber exports, and the high loonie means we get less for resources. All that plus economic slowdown in the US should reduce the trade deficit ... I think the loonie will max out at around .95 and then turn around. Other currencies have been having trouble making headway against USD lately, so the USD weakness may have hit the wall generally. The loonie may stay above parity for another 6 months or so, and then reality will set in. Watch oil.
I am personally doing well out of the horizontal struggle in USDJPY between the carry traders and the weak buck, with occasional forays into EURUSD and GDPUSD when they look weak.
USDCAD I am leaving alone until I see definite signs of a turnaround. Not happy shorting it at a 30-year low.
I am personally doing well out of the horizontal struggle in USDJPY between the carry traders and the weak buck, with occasional forays into EURUSD and GDPUSD when they look weak.
USDCAD I am leaving alone until I see definite signs of a turnaround. Not happy shorting it at a 30-year low.
Trying to keep you sharp