USD/CAD

[cbueno]

Heikin-Ashi suggests more downside to come

[Big Mike]

[quote=John Kicklighter;142325]Good call on the directional break Mike.


Thanks for the compliment, John
I am still holding my USD/CAD short position. We reached a support/ consolidation level now at 1.05 that may last for a couple of hours. Then, we will likely see another shoe drop.

[mrod3360]

If you listen to the Dodge language . The BOC is clearly not happy with the CAD under parity . In there text they pointed out that this was not acceptable and ONE of the reason's for the 25 cut. You watch how the rhetoric starts when and if it goes below parity again.. Also keep in mind the only part of the cad economy doing well is the oil sector. If you really look into the numbers many of the industries are suffering.

More money in the up move the downside is very limited. Speculators took it to far to the downside. Remember it is up 10% from the low.. You have at least another 3 to 5 % up

Mike

[speculator84]

It's very interesting to hear the different sides to the deflation/inflation story.

I for one am I on the super-inflationary side of the fence. The central banks will inflate and inflate to overcome any problems in the economies. Which will break everything... severe deflation would mean low low interest rates accross the board. We are running out of natural resources....the demand from the world isn't going to stop...

[Big Mike]

Originally Posted by speculator84 It's very interesting to hear the different sides to the deflation/inflation story. I for one am I on the super-inflationary side of the fence. The central banks will inflate and inflate to overcome any problems in the economies. Which will break everything... severe deflation would mean low low interest rates accross the board. We are running out of natural resources....the demand from the world isn't going to stop...

No doubt that FED and other central banks will attempt to flood the money with easy credit. Likely, it won't work. Just look at Japan; Japanese have been trying that for the last 15 years by lowering the bank rate down to zero, but it didn't help either.

[John Kicklighter]

The 15-minute chart of USDCAD doesn't look too encouraging. Lower highs and a clear magnetize towards parity. We are once again coming on parity and I'm considering dropping my second lot in my long position. I will likely hold out for the stop though.

Interesting discussion you guys have going on the fundamentals. I just finished writing the our first quarter outlook on USDCAD for DailyFX (which should be up with the rest of the forecasts next week after all the editing).

I agree with your general outlook speculator, that inflation is still a problem - both in the US and Canada. However, I'm not as attached to the idea of commodities necessarily holding an overwhelming influence on USDCAD price action. While natural resources are running out, they have been running out since industrialized nations starting utilizing them. I've read statistics that suggest we still have a healthy supply in crude for at least another 80 years given the known reserves and wells. Most of the other commodity groups will have a lot longer lives.

At the same time, we need to consider the benefit to GDP through Canadian commodity exporters' revenues will compete with domestic inflation, so there is no clear correlation there.

And, what's more, you have greater concerns to overshadow commodities' importance in the greater scheme of things. Global growth trends are cooling and demand from Canada's largest trade partner is suffering, so the business sector and general growth could be in trouble. And, the BoC just changed its monetary policy bias.

So, I think we could have a wide range for a while unless one of these fundamental issues takes clear dominance (like strong exports and a tightening labor market did for the Canadian dollar over the previous few years through 2007).

[Big Mike]

You have to consider that Canada doesn't really have an independent fiscal policy, but hardly anybody does these days. All decision of BOC tend to follow FED with a slight time lag. Now, with the new governor of BOC taking position of Mr Dodge soon, and considering his background at Merrill Lynch in New York, it is quite likely that BOC is moving much closer to the single North American currency. They talked about it for few years now, but it might become a reality soon.

[Big Mike]

it looks like we have a slight problem breaking thru the support at 1.001;
it is stronger than I thought, extending back to Dec 8 and Dec 17.
Once we'll overcome this, it will become an overhead resistance line.

[Antonio Sousa]

USDCAD - The ratio of long to short positions in the USDCAD stands at 2.28 as nearly 69% of traders are long. Yesterday, the ratio was at 2.34 as 70% of open positions were long. In detail, long positions are 5.0% lower than yesterday and 8.2% stronger since last week. Short positions are 2.3% lower than yesterday and 8.7% weaker since last week. Open interest is 4.2% weaker than yesterday and 1.9% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.


Source: FXCM Execution Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/strateg...353412325.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

[Big Mike]

On the dailies the USD/CAD seems to have a long way to go down yet. The Fibo 38% will not be until we reach 0.9787.
Stochastic is still pointing seriously down; so is RSI, MACD and momentum.

[Gasman]

Big Mike's thoughts on a single NA currency have been widely discussed but I don't think the incomming BOC governor Carney has any intention of going that route. Check out this recent interview:

http://www.cbc.ca/money/story/2007/12/05/carney.html

[Terri Belkas]

Originally Posted by Gasman Big Mike's thoughts on a single NA currency have been widely discussed but I don't think the incomming BOC governor Carney has any intention of going that route. Check out this recent interview: http://www.cbc.ca/money/story/2007/12/05/carney.html

That's a great link Gasman. I'm similarly skeptical that Canada and the US would move towards a single currency. For the most part, separate currencies have worked out just fine and I think ideas like this tend to gain popularity only in times of market distress. While Canada and the US are heavily reliant on each other for trade, other aspects of the economy, like labor markets, are probably not integrated enough for a single monetary policy board to manage without hurting one of the economies.

[John Kicklighter]

We we finally got our first taste of USDCAD back below parity in more than two weeks. I was looking at that 40 point sell off over the past half hour; and just as quickly as it came, it disappeared. IMO, this is certainly a reflection of low liquidity conditions. And, under these circumstances, I don't think a USDCAD dipping its toe back below 1.0 is a sign that is a break on its way - though the descending triangle certainly suggests that.

Still holding my split long position and still in the red. Leaving stops be, but given these choppy conditions I wouldn't be surprised if someone takes advantage of the low liquidity to drive through stops. We'll have to see....

[Big Mike]

This USD CAD just loves triangles these days; after breaking down earlier today, it formed another triangle between 1.0044 and 0.9949 with the terminus at 0.9984. Quite symmetrical, in fact. So far, wave A, B, C complete within the triangle. Should break down soon.
I will close my short then, since it is likely the final pattern of this leg, before the bounce up.

[John Kicklighter]

Still holding the USDCAD position and this slow slide lower is not very pleasant. I would have preferred a sharp break and some kind of momentum to quickly bump me out so I can have peace of mind. Nothing doing though. I have to sit here and watch it slowly approach my stop loss. I really dislike holiday trading for this pair. Big traders in both Canada and the US are already off their desks or are otherwise squaring their book.

As a standby though, I still like the daily chart of NZDUSD. Good trend channel and three begrudging dojis (volatility aberration, not a valid candle stick pattern). If we truly see range conditions next week, I could see the rising support from the channel bottom directing a modest retracement.

Anyone else looking at NZDUSD?