Visial USD/CAD this year
- Thread starter kalzayani
- Start date
Nah. Current levels are an overreaction to economic news earlier this year and are being sustained by (a) inertia and (b) oil being near $70. BUt it looke to me like we bottomed out on the 6th and have been gradually recovering since then. The support level has been inching up at about 4 pips a day, figure it's currently around 1.0650 with resistance around 75-100 pips higher. I go long at anything under 690 and sell at 725. Works for me. High loonie will lead to worse economic news in the summer. Dodge will raise rates next month, but I doubt that will have any effect. Nobody sane plays USDCAD for the carry. Watch the economic news, especially the US slowdown and declining trade deficit - and also oil prices. The housing market is often a bird-dog for the economy - a housing slump preceded the 1987 and 1989 crashes - and with negative savings, the US economy is running on empty. A US recession will seriously cut the trade deficit and dump oil prices, and worse Canadian trade and tourism figures because of the high loonie will damp down the worldwide fad for loonies, at which point USDCAD could go zooming back up. Given a perfect storm like that, we could see USDCAD at 1.20 by year end. Anyway, if we hit 650 again I'm loading up and waiting.
Yes, not a good day. The manufacturing figures are surprisingly strong despite the high loonie. Growth is off, but still ahead of the US. And oil is holding in the high 60s. And Dodge is probably going to up rates next month while Bernanke hangs tight. Still, the loonie is way, way over where everyone's fundamental models say it should be, so a lot of this is psychoillogical. The loonie remains a resource-based currency, resource prices are off last year's (especially in loonies), and its current levels are an overreaction to news. I don't believe that short-term squiggles on the chart are meaningful.
I'm still looking for a repeat of last year, when a lot of people were also talking about parity and yet USDCAD picked up 800 pips in the last two quarters. That would put us back at 1.1350 or so. Also last year's numbers pretty much agreed with the models (Bank of Canada, Scotiabank, RBC, my own little spreadsheet, which predicted 1.17 by the end of the year). Given that there's now a lot of air in the loonie, a 1000-pip or even 1500-pip recovery is not out of the question.
I'm still looking for a repeat of last year, when a lot of people were also talking about parity and yet USDCAD picked up 800 pips in the last two quarters. That would put us back at 1.1350 or so. Also last year's numbers pretty much agreed with the models (Bank of Canada, Scotiabank, RBC, my own little spreadsheet, which predicted 1.17 by the end of the year). Given that there's now a lot of air in the loonie, a 1000-pip or even 1500-pip recovery is not out of the question.