Canadian Dollar Trading Picks

• 5 out of 8 DailyFX Analysts Bearish Canadian Dollars

There have been alot of Canadian economic data released this week and big moves in oil prices, yet the price action of the loonie has been mixed against different currency pairs. Find out what DailyFX Analysts think about the Canadian pairs:

Chief Currency Analyst - Kathy Lien

My picks: Short CAD/JPY
Expertise: Combining Fundamentals with Technicals
Average Time Frame of Trades: 1-3 Days

Oil prices are trading at $125 a barrel this morning yet CAD/JPY is trading near its 5 month highs. This is of course largely due to the moves in USD/JPY rather than the market's sentiment towards Canadian dollars. I think it is time for a correction in CAD/JPY, particularly since it could form a triple top at current levels with the 200-day SMA sitting at 106.97. I am bearish here 106.83 against 107.40 for a move to 106.30 and then 105.85.

Senior Currency Strategist - Boris Schlossberg

My picks: Short EURCAD
Expertise: Fundamental
Average Time Frame of Trades: 6-24 hours

European data overnight was horrible but markets have not reacted to the news focusing on US weakenss instead. Still as the day progresses i think the realization that EZ in serious trouble wil begin to creep in and euro should feel the pressure. Meanwhile Canada has nothing on the calendar until next week, so I think CAD will remain stationary for the time being. I going short EURCAD for the day with a stop at 1.5880

Technical Currency Analyst - Jaime Saettle

My picks: Long USDCAD at 1.0055, stop .9985
Expertise: Technical
Average Time Frame of Trades: 1 Month

Last Week: The drop from 1.0322 is wave E of a triangle (which I had previously thought was complete at 1.0047). Wave E could be complete at .9974 E waves are usually deep...for a reason. The final wave of a correction (wave C in flats and zigzags and wave E in a triangle) are sharp and deep; convincing the majority of market participants that the trend has turned (in this case...that the USDCAD is headed lower). This creates the psychology required for resumption of the trend (in this case...USDCAD higher). My strategy is to go long the USDCAD on a drop below .9974 (look for .9900/50 support), against .9818, target is above 1.0378.

This Week: The strategy to long on a drop below .9974 didn't work because price failed to drop below .9974. Unfortunately, the low was .9978! A drop below 1.0056 would complete a corrective drop from 1.0017. Fib support should be strong at 1.0039. We are preparing for the eventual break above 1.0378.

Currency Strategist - Terri Belkas

My picks: Long EUR/CAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days

Given the confluence of a rising trendline and the 100 SMA at 1.5796/1.5800, I like EUR/CAD to the upside for a test of 1.5955. This morning we saw that extremely disappointing European data (German IFO, Euro-zone services and manufacturing PMI) had a minimal impact on the euro, suggesting that the currency is more vulnerable to bullish runs than bearish ones. Of course, we have to keep an eye on oil due to its correlation with the Canadian dollar, as sharp moves could tip EUR/CAD higher or lower. Risk can be kept pretty tight with this pair, as a drop below the trendline at 1.58 will likely be followed by a test of the mid-June lows near 1.57.

Currency Analyst - David Rodriguez

My picks: CAD/JPY short
Expertise: System Trading
Average Time Frame of Trades: 2-10 weeks

We've seen major currencies break above key resistance against the Japanese Yen, but the Canadian Dollar has been unable to break its multi-month range despite recently bullish economic data. If something doesn't rally on bullish news, then I think it's basically not going to rally at all. To that end--and to offset some of the JPY-short exposure I have against the USD and GBP--I propose going short the CADJPY at or slightly above current market levels. Failure at its 200-day SMA and 2-month range top would spell out further losses, and we'll stay short as long as price stays below 107.20. First reasonable price target is the 38.2% Fibonacci retracement of the 103.65-107.18 move at 105.84, while full profit targets will be set at the full retracement of said move (at 103.65).

Currency Analyst - John Kicklighter

My picks: Long EURCAD
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week

Considering I am holding a small short position in CADJPY and waiting for a AUDCAD upside breakout, finding a new position could boost exposure in a potential turning point for the Canadian currency. On the other hand, neither of these positions is truely active. Therefore, I am considering a small, cautious EURCAD long to take advantage of ongoing congestion for the estewhile currency. Fundamentally, both economies are still relatively strong and the one year forward interest rate forecast is calling for a quarter percent hike from both - even ground for ongoing range trading. Technically, the pair is range bound with a broad ascending wedge defining the bigger picture. However, the rising trend line that holds up support with a 50% fib of the May 29th to July 2nd upswing are both well below spot at 1.5730. More immediate is the the confluence of the 50-day and 100-day SMAs around 1.5810.

As I suggested before, I don't want to take to aggressive a position on the potential of a breakout in CAD pairs with my other two standing limit orders. I will go long nearer to short-term support on two half size lots. My initial stop will be no more than 60 points below support, and my first target will equal this risk. The second target can be more aggressive, but I won't put it beyond the building resistance at 1.60. If this trade does not trigger and take profits in the next few active trading days, I will exit the positions to avoid the congestion and potential for overextended exposure.

Currency Analyst - Ilya Spivak

My picks: Short AUDCAD on a daily close below 0.97
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months

AUDCAD has been guided higher by an upward sloping trend line since February. Yesterday's candle hit right at support above 0.97, with the current candle testing below. A downward resistance line along the highs since 06/09 suggests a Rising Wedge bearish reversal pattern forming over the past 6 weeks. Negative divergence with the 14-day slow stochastic oscillator adds further credence to the bearish scenario.

Strategy: Short AUDCAD on a daily close below 0.97. Initial target is 0.9439, the 38.2% Fibonacci retracement of the 01/31-06/09 rally.

Currency Analyst - John Rivera

My picks: Long USD/CAD
Expertise: Fundamentals Combined with Technicals
Average Time Frame of Trades: 2-4 days

I am sticking with my long USDCAD trade from last week and call for 1.02. The pair remained firm in spite of hotter than expected headline Canadian inflation, as the core reading remained unchanged. The continuation of easing oil prices only makes the trade more attractive as the recent resliency of the Canadian ecnomy has been predicated by the growth generated by rising commodity prices. Speculation has emerged that the BoC may raise rates before the Fed, which would clearly lend loonie support. However, with manufacturing dependent provinces like Ontario call for help, the central bank may be reluctant to be too agressive in their monetary policy. Nevertheless, there is significant broad based bullish dollar sentiment in the market which should push the price level above our target.

DailyFX

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