Dollar Volatility Leads DailyFX Analyst Positions Towards USDCAD
The Canadian dollar has come to an unusual point. After a significant sell off against most of its major counterparts, the market must now determine whether a dominate trend is being established and if there is going to be a brief retracement before the slide continues. See how our DailyFX Analysts are positioning for this below:
Chief Strategist - Antonio Sousa
My picks: Long USD/CAD
Expertise: Fundamentals, Sentiment and Volatility.
Average Time Frame of Trades: 1 day to 3 months
The U.S. dollar has been very strong against the Canadian dollar and I expect this trend to continue going forward. In fact, with the world economy slowing down is reasonable to think that the demand for commodities will also begin to slow down. As a result of this, commodity sensitive currencies like AUD, NZD and CAD will be particularly vulnerable. My recommendation is to buy USD/CAD at 1.05 for 300 pips in profit potential with a stop in a daily close below 1.03.
Senior Currency Strategist - Jaime Saettle
My picks: USDCAD short, against 1.0645, target 1.0450
Expertise: Technical
Average Time Frame of Trades: 1 month (thi s is a very short term idea)
As the USDCAD pattern has evolved, we are viewing the decline from 1.0726 as wave 4 within the advance from .9974 (which is larger wave C). The USDCAD should continue to slide in this 4th wave, possibly to the 38.2% of .9991-1.0726 at 1.0445. Former resistance at 1.05 is also potential support.
Currency Strategist - John Kicklighter
My picks: Short EURCAD
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week
The Canadian dollar is in an unusual position against most of its benchmark counterparts. The currency has been under considerable selling pressure against many of its most liquid pairs - especially USDCAD. However, while this move could be establishing a new trend, there is still the need for a retracement after such a strong downdraft. With this in mind, we can look at the crosses and filter for the best fundamental and technical loonie setup. Topping the list is EURCAD. I have been watching this pair for the rising wedge that has developed since last November's swing low. With today's decline, the pair has broken a shorter rising trend, a notable fib and a 100-day SMA. Fundamentally, interest rate expectations show a 12-month forecast for a little more than one hike from each group. More convincing however is the outlook for growth between the two economies. The Euro-Zone has just recently come off a strong run and the cumulative effects of rising unemployment, high inflation, rising lending costs and a deteriorating housing market will no doubt reverberate in the quarters ahead. In Canada, recent GDP data has actually rebounded and further boosted the outlook for expansion.
For a position, I would look for a rebound to test former support around 1.5830/60 and establish a two lot short position. Stops will be relatively close (determined upon the price action around the entry) and the first target will equal to the initial risk taken with the position. The second half of the trade will be far more aggressive (perhaps 200-300 points). To conserve profit it is always prudent to move the stop on the second lot to breakeven when the first target is hit and trail it as the trade produces further gains.
Currency Analyst - Ilya Spivak
My picks: Long USDCAD
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months
Recalling our third quarter Canadian Dollar fundamental outlook, we are looking for prolonged USDCAD upside momentum. Current positioning sees the pair easing lower from the 1.07 level having show a Bearish Engulfing reversal candlestick formation. We will look for a pullback to find support at 1.0440, the 38.2% retracement of the latest 07/22-08/12 up move. A long position form this level will target 1.0865, the 08/16/07 wick high.
Currency Analyst - John Rivera
My picks: Short USDCAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days
I am bearish the USDCAD as the pair has begun to retrace after its meteoric rise. The recent bounce in commodity prices should add to Loonie support in the nearterm. The pair has a ways to go just to fall to support at 1.0449, the 38.2% Fibo level of the recent rally of 0.9992 - 10732 Therfore that is where I will set my target as broader dollar weakness on renewed recesion concerns will help push the pair lower.
DailyFX
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