USD/CAD - Page 153

SkiBunny · #**2281** (**permalink**) 01-15-2009, 04:20 PM

Quote:

Originally Posted by se1paul

Great post. Interesting to get a different perspective on the outlook for crude, one that differs from "it's too cheap, it has to get back to $70-$80".

However, I remain a long-term bull on crude and other commodities, and will gradually increase my exposure to energy stocks, as and when the stock market dips or (preferably) when the sector sells off, as investors become increasingly frustrated by the continuously low price in commodities.

As you know, commodities are late cycle performers. Further, historically speaking, the leader in one bull market never leads the next bull market. Combining those two pieces of wisdom, I think it's safe to wait a while for a commodity bull run. Until the global economy has healed, I think any commodity rally will be just a dead cat bounce.

And can't imagine the CAD$ breaking 1.15 until the commodity story turns around.

se1paul · #**2282** (**permalink**) 01-15-2009, 04:30 PM

Quote:

Originally Posted by SkiBunny

As you know, commodities are late cycle performers. Further, historically speaking, the leader in one bull market never leads the next bull market. Combining those two pieces of wisdom, I think it's safe to wait a while for a commodity bull run. Until the global economy has healed, I think any commodity rally will be just a dead cat bounce.

And can't imagine the CAD$ breaking 1.15 until the commodity story turns around.

Commodities were the last to fall and could well be the last to rise from this bear market.

I am bullish over a 5-10 year cycle and will gradually scale into energy and commodity stocks as and when sell-offs occur, with the preference initially for investments in the majors, rather than the miners - which will likely need a round of capital raisings and certain dividend cuts in 2009.

As for USD/CAD, I have never traded this pair, so have absolutely nothing of any value to add, I'm afraid :-) However, I have read many of your previous posts, nearly of which show a great deal of wisdom and depth of understanding on macro-economic issues.

John Kicklighter · #**2283** (**permalink**) 01-16-2009, 11:29 AM

Quote:

Originally Posted by bullman

hi,
This pair is one of my favourites. I believe next week 20 Jan there will be a rates annoucement for CANADA. I did some research and I believe there will be a rate cut and I hope SO. I will long the USD/CAD next week.

I hope you are not taking a long bias just because of the rate decision. If you have come to the conclusion that the BoC is going to cut on the basis of sound fundamentals, it is likely that the rest of the market is expecting the same. If that is the case, they are already adjusting their positioning now to account for such an outcome.

With an official consensus (according to a bloomberg poll of economists) calling for a 50 bps, I think you should consider this the standard for what would leave the market unaffected. No cut would spur the Canadian dollar higher while a deeper cut or commentary to suggest ongoing cuts would keep impart USDCAD with some buoyancy.

John Kicklighter · #**2284** (**permalink**) 01-16-2009, 11:35 AM

Quote:

Originally Posted by se1paul

Commodities were the last to fall and could well be the last to rise from this bear market.

IMO, commodities are 'late to the game' because they have genuine economic value rather than being largely speculative instruments for return. I think the whole reason why there was so much interest in commodities (and such an incredible rally in the prices of some of the key raw materials) was specifically the build up in speculation.

With the US government (and a few others around the world) cracking down on speculative drives in these necessary goods, the swings will once again be more constrained and slow to follow any sharp rebounds in high-speculative financial assets.

se1paul · #**2285** (**permalink**) 01-16-2009, 12:59 PM

Quote:

Originally Posted by John Kicklighter

IMO, commodities are 'late to the game' because they have genuine economic value rather than being largely speculative instruments for return. I think the whole reason why there was so much interest in commodities (and such an incredible rally in the prices of some of the key raw materials) was specifically the build up in speculation.

With the US government (and a few others around the world) cracking down on speculative drives in these necessary goods, the swings will once again be more constrained and slow to follow any sharp rebounds in high-speculative financial assets.

Commodity prices were also hit hard through the forced liquidation of hedge fund positions in the latter part of 2008, which was triggered from investor redemption requests and vastly reduced, and more expensive, credit lines on offer from prime brokers. This, in turn, put a swift end to the very profitable, leveraged long commodity / short financial trade. With the benefit of hindsight, we can now see how much of an inflated asset-bubble had formed with respect to the price of crude oil. That is an important reason, in my opinion, as to why commodities, and commodity stocks, were late entrants to this bear market.

John Rivera · #**2286** (**permalink**) 01-19-2009, 08:13 AM

The USD/CAD has found support at the 50.0% Fibo level of the 1.3008- 1.1763 decline and is now testing 1.25000. Traders are getting ahead of the expected BoC rate cut tomorrow. The 1/15 high of 1.2673 could be attainable but we could see some resistance at 1.2600

John Rivera · #**2287** (**permalink**) 01-19-2009, 08:22 AM

Goldman Sachs Prediction of a swift violent rebound in oil prices to $65 bbl latter in the year just crossed the wires and has stalled the USD/CAD's momentum.

leithtec · #**2288** (**permalink**) 01-19-2009, 09:36 AM

As this USD/CAD Pair reaches towards Friday's (Jan 16th) High of 1.2580 ... and possibly just above this Price ... I will be watching for a reversal set-up as the High Cloud maxes out along with running Volume and the 10 Day Williams %R completes.

John Kicklighter · #**2289** (**permalink**) 01-19-2009, 12:03 PM

I'm not really impressed with the potential for USDCAD. The pair has fallen into congestion in the middle of an otherwise vague range (though resistance is certainly clear, support is not).

For a CAD pair, CADJPY is far more pressing. The pair is making a major base around 71.00/25 and there is clearly momentum in the the trend of lower swing highs that defines a dominant trend.

We have the potential in a break above 74, 75 and the falling trend now at 79. Alternatively, a clean move below 71 could usher in a much more prolific move.

STifigiu · #**2290** (**permalink**) 01-19-2009, 12:47 PM

Quote:

Originally Posted by John Rivera

Goldman Sachs Prediction of a swift violent rebound in oil prices to $65 bbl latter in the year just crossed the wires and has stalled the USD/CAD's momentum.

I don't know exactly how possible this may be given two main factors.

1) the economies in the developed world continue to weaken and cool down with signs that this could continue well into 2009
2) the major OPEC nations, though having pledged to lower supply, have based most of their budgets around $90-100/barrel oil and now face very large pressure to continue pumping.

Barring a major event risk (which is a pretty big possibility I admit) I don't see oil pulling too much of a gain any time soon. Then again, a lot can happen within a year. Am I missing something important?

- Stefan

sameboat · #**2291** (**permalink**) 01-19-2009, 01:47 PM

Quote:

Originally Posted by John Rivera

Goldman Sachs Prediction of a swift violent rebound in oil prices to $65 bbl latter in the year just crossed the wires and has stalled the USD/CAD's momentum.

It would seem Goldman and Currie are pumpers. Their prediction last year seems basically useless; it looks like oil hit their target for a week and came crashing down for the remainder of the year. I'm new to this so I probably missed their revisions along the way but 2-years is not enough time for them to become clairvoyant. Nonetheless, I think USD/CAD has run out of steam going into the Obama coronation and rate cut picture; it should hold and then find direction (probably short-term lower). Not sure technicals confirm this..

John Kicklighter · #**2292** (**permalink**) 01-19-2009, 04:03 PM

And, don't forget about tomorrow's BoC rate decision. Another 50bps would mean they could easily reach zero (or get close enough to it such that it symbolically represents zero) from a benchmark of 1.00 percent. I think there is some appeal yet left in the Canadian dollar associated with it holding rates because it is perhaps doing better and that it's economy has avoided the recession that the US is being drug down by. Each piece of data that punches a hole in this theory, the closer this pair will come to a fundamental equilibrium.

What do you guys think the BoC outcome will be? I'm in line with the economist consensus with a 50bps cut but think they will offer commentary to suggest they will take a more controlled pace going forward.

sameboat · #**2293** (**permalink**) 01-19-2009, 05:25 PM

I think there's either a 50bps or 75bps possible, and my personally derived betting odds are mildy in favour of 50bps, since the banks locally (with frontage from realtors) are doing a major RE push here to stabililize the 20% drop in home values over just 2 months. I think it's working a little.. likely postponing a nasty RE downturn by a few weeks.

If the BOC goes against estimates (to 75bps), it might be giving lie to the going story of stability and the "media capital" built up in the last few weeks will be out the window. With Flaherty, the BoC and the Big 5..6 in a lot of recent talks, I would imagine that some consensus has been met on spin.

Anyway, I'm not "in line" with either projection based on fundamentals since I have no idea what the quantitative fundamentals behind these decisions are. It's all just gambling.

SkiBunny · #**2294** (**permalink**) 01-19-2009, 06:29 PM

Quote:

Originally Posted by sameboat

It would seem Goldman and Currie are pumpers.

They hold massive investments in crude and have tankers of oil around the world, which are full of oil. Where's the full disclosure accompanying their so-called opinion?

John's point is valid about comparative rates. I personally empathize with it... I received a USD stmt last week that stating 0% interest - it really makes me want to move any cash out of USD.

esimon · #**2295** (**permalink**) 01-20-2009, 12:34 AM

Look at how the US Dollar has rallied against the CAD. Although I agree that there is resistance now, at possibly 1.26-1.27. My credit union sold dollars to me at 1.27 on Friday, much cheaper than they used to. I also opened a US Dollar savings account... I will now be a long term saver in US dollars. I know there will be buying opportunities as the CAD strengthens.