Why to short the Canadian Dollar

Good points Poole, I agree completely.

Manufacturing employs in my best guess, 5-7 million people in Canada. While mining employs something like 400,000.

Their was a story yesterday that I read in either the Post (probably the post) or the Globe and mail saying 14 condo projects are going up in Toronto. The first round of buyers were all Canadian. Supposedly this new round is all foreigners... Asian, Eastern European ( Russian) , Saudi Arabian...

One wonders if this boom in asset purchases by foreigners might have an effect on Canada's illiquid currency.
 
Time to short the Canadian dollar. I was at Tim Hortons and the biker in front of me was talking about buying Canadian dollars. My John D shoeshine guy moment
 
Quote from Poole:

FACT: canada sends 82% of its exports to the USA...it's not like canada has anything the USA really needs
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So Canada exports 82% of its goods to the U.S.

And Canada is their biggest trading partner

http://www.census.gov/foreign-trade/top/dst/current/balance.html

so Canada doesn't have anything the U.S. really needs?

I understand that the U.S. can source products from a country with a more favourable exchange but I'm not sure if I would say that Canada has nothing the U.S. really needs besides oil. That amount of trade is sort of a freight train itself and would take a while to slow down, right?

It takes balls of steel to short the CAD here. Someone will pick the top, but a lot of others will have their heads handed to them. I think that's a bit of what we saw on Friday. Having said that, I like Gambitman's indicator!
 
Quote from traderNik:

So Canada exports 82% of its goods to the U.S.

And Canada is their biggest trading partner

http://www.census.gov/foreign-trade/top/dst/current/balance.html

so Canada doesn't have anything the U.S. really needs?

I understand that the U.S. can source things from a country with a more favourable exchange but I'm not sure if I would say that Canada has nothing the U.S. really needs besides oil.

It takes balls of steel to short the CAD here. Someone will pick the top, but a lot of others will have their heads handed to them. I think that's a bit of what we saw on Friday. Having said that, I like Gambitman's indicator!
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only safe way to do it is to work your way in low leverage

right now im long usdcad for .5x of my account (so not even 1:1 leverage yet)

if it falls to .88 usdcad i will be in at 1:1 leverage

if it goes to .80 i will be in at 2:1 leverage

if it goes lower than that, well then USA is done for probably anyways, so moot point.

any by needs, let me define that.... need is something that you absolutely must buy, you cant do without it nor substitute it (at least without great difficulty short term). So things that we dont need are ipods, new BMWs and Lexuses, new laptops, xbox 360s, fancy cheese from france, new mansions - the list goes on, probably 9/10ths of what the average american buys they dont actually need.
 
Quote from Poole:

only safe way to do it is to work your way in low leverage

right now im long usdcad for .5x of my account (so not even 1:1 leverage yet)

if it falls to .88 usdcad i will be in at 1:1 leverage

if it goes to .80 i will be in at 2:1 leverage

if it goes lower than that, well then USA is done for probably anyways, so moot point.
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yep, sounds like a relatively safe way to play the short side if you're a longer term CAD bear. Good luck with that trade.
 
Quote from Poole:

any forex position reports you see, you should just ignore

the forex market is so fractured, fragmented, and off the books, large, and unregulated, that these types of report are laughable.

and even if you wanted to analyze this report, its still laughable.
78% of traders are long - and that means what?
whose to say that the actual dollar value of the 22% are short is a 50X a larger position than the 78% who are long?
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The reports I posted links to have nothing to do with "% of traders" and everything to do with the aggregate value of the long and short positions at each of those dealers. Whenever you see references to "% of traders," that's just sloppy writing, including on DailyFX (shocking, I know). Laugh all you want, but at least try to understand what it is you are laughing about.

I do agree that such reports are probably of limited value to the casual outside observer, except at significant technical points, where the majority is usually wrong. Nevertheless, one of those dealers is running two managed currency funds (with different leverage), based on that dealer's published sentiment indicator, and both funds have been performing surprisingly well so far.
 
Quote from scriabinop23:

Second, a friend did an analysis of both CAD and crude, and showed in the last 30 years or so, they have never (or rarely) been this far from the 200dma. In past instances of lesser runoffs in price, there was usually a several week quick reversion that occured.

Having a strong currency is not easy on their exports either, as the US is their largest trade partner. Realize this.

Wearing flags on backpacks is no way to value a currency.
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Hum...except your friend´s observance, I agree, some good arguments, but "reversing to the mean" has been this summers nightmare for Quants...
 
Quote from ASusilovic:

Hum...except your friend´s observance, I agree, some good arguments, but "reversing to the mean" has been this summers nightmare for Quants...
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hehe.. on the other hand, quant reversal to the mean strategies that were leveraged were based off of short term data (days, weeks) or valuation data only relevent to the markets as they function lately.

mean reversion strategies based off long term data (30 yrs) usually require lower leverage, since they capture long trends, thus have less accurate entrances and exits. Are much more likely to fail on a tick by tick basis.
 
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