The big news seen overnight was the energy sector creeping higher as shares broke through January highs on the rally in crude oil prices.
Medium term
Trade view / 09 May 2014 at 15:32 GMT

It isn't loonie to look for renewed USDCAD downside

FX Trade Strategist /
Instrument: USDCAD
Price target:
Market price:

The surprisingly poor Canadian labour report crushed weak short USDCAD positions when USDCAD jumped 0.0075 points. This may be an opportunity to re-establish a bearish USDCAD position as both the fundamental and technical outlook support a renewed test of the lows. In addition, European Central Bank president Mario Draghi's hint of policy action in June has put downward pressure on the EUR and, by default, EURCAD. The short-term USDCAD technicals are bearish while trading below 1.0970-90 supported by the 100-day moving average at 1.0980. The 61.8 percent Fibonacci retracement of the April-May trough to peak is 1.0955 and will act as resistance against topside probes.

Management and risk description

USDCAD trading will remain choppy for the short term allowing us to leg into this trade and mitigate the damage if we are wrong. The key risk to this idea is if the Canadian labour report is a harbinger of more bad news ahead and the Canadian dollar declines. The trade also hopes to benefit from further EURUSD declines that could reverse if the market decides that, in the case of Draghi, action speaks louder than words.


Entry: Leave order to sell 1/2 position of USDCAD at market (currently 1.0895) and balance at 1.0940.

Stop: 1.0995.

Target: 1.0810.

Time horizon:
  2 weeks.

Chart: USDCAD 30-minute with sell levels and intraday downtrend shownusdcad

Source: Saxo Bank

Chart: USDCAD 4-hour with April-May Fibonacci
usdcad Source: Saxo Bank

Chart: USDCAD Daily 5-year with moving averages


Source: Saxo Bank

-- Edited by Kevin McIndoe


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kirand kirand
hi Michael going for short around
Raymondscott Raymondscott
This comment has been redacted


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