Short term
Trade view / 31 August 2016 at 13:38 GMT

USDCAD is looking for love at the top of the range

FX Consultant / IFXA Ltd


The USDCAD uptrend that began following Janet Yellen’s speech last Friday is intact. A break of the overnight high at 1.3111 sets the stage for a rebound to the mid-July peak. A variety of Fed speakers have delivered somewhat hawkish comments which suggest that a September rate hike is a possibility which will be reinforced on Friday, if the nonfarm payrolls report is better than expected.

Oil prices are soft due to rising US inventories, as evidenced by yesterday’s API report and reports of increased Opec production, particularly Saudi Arabia and Iraq. Soft oil prices and a hawkish US rate outlook should lead USDCAD back to the mid-July peak.

Management and risk description

This is a risky trade. Today’s June GDP data for Canada could surprise to the upside and undermine USDCAD. A weaker than expected US employment report ahead of a long weekend in Canada and the US could lead to profit taking and USDCAD selling.

The other major risk is that this trade advocates getting long at a two-week high, even though this latest rally is kind of stale, which is why the stop loss is close.


Buy: ½ USDCAD at market (1.3105) balance at 1.3055
Stop: 1.3039 offered
Target: 1.3220
Time horizon: 3 days

USDCAD 30-minute showing intraday uptrend, stop loss, and take profit
Source: Saxo Bank 

USDCAD 4-hour noting break of July-August downtrend
 Source: Saxo Bank 

USDCAD 5 years, daily with moving averages
Source: Saxo Bank

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
31 August
izwansamba izwansamba
Tq mike.
31 August
John Roberti John Roberti
Dear Mike, I am with you on this one because EIA report has pushed oil further down and other US data were positive except Chicago PMI while Canadian data were not enthusiastic... I believe 1325 or 133 possible for friday
31 August
Michael O'Neill Michael O'Neill
This trade goes to hell in a hand basket if Friday's NFP is weak.
01 September
Estuardorlemus Estuardorlemus
Hi Mike, What are your stands on the NFP report tomorrow?
01 September
bancodemon bancodemon
It sure does go to hell if Friday's numbers are weak... but I still fancy my chances.


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