Top Pick: Short USD/CAD
- Shorting USD/CAD is today's top pick
Despite the drop in oil prices, 6 out of the 9 DailyFX Analysts are looking for more strength in the Canadian dollar. The recent drop in crude has failed to have a meaningful impact on USD/CAD, which is trading more US fundamentals than oil prices. Read on to find out which CAD pair we like best:
Chief Currency Analyst - Kathy Lien
My picks: Short USD/CAD
Expertise: Combining Fundamentals and Technicals
Average Time Frame of Trades: 1-3 Days
Recent Canadian data has been strong with manufacturing shipments and international securities transactions all beating expectations. I think this should keep the Canadian dollar bid. Technically, the 50 and 100-day SMA provide stiff resistance at 1.0095. The pair should not only break parity but also head towards 0.9950
Senior Currency Strategist - Boris Schlossberg
My picks: Short EURCAD
Expertise: Fundamental
Average Time Frame of Trades: 6-24 hours
Canadian Transactions report printed much better than expected indicating huge capital flows to the neighbor up North. Meanwhile lower oil and better US data should help the dollar against the euro so I am going short EURCAD for the day
Technical Currency Analyst - Jaime Saettle
My picks: Long USDCAD AFTER a drop below .9974, against .9818, target is above 1.0378
Expertise: Technical
Average Time Frame of Trades: 1 month
Last week: "The bottom line is that I remain bullish as long as price is above 1.0047. With price above there, I think that a triangle is complete. However, the depth of the drop from 1.0238 has introduced serious doubt. Still, the potential payoff is big compared to the risk."
Now: 1.0047 did give way, proving me wrong. I was too early here but I am still bigger picture bullish USDCAD against .9818. 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.
Quantitative Currency Strategist - Antonio Sousa
My picks: Sell USD/CAD
Expertise: Interest Rate Dynamics, Volatility and Sentiment.
Average Time Frame of Trades: 1 week to 1 year
Despite the recent selloff on the price oil of more than $10 a barrel, I expect the Canadian dollar to appreciate against the greenback on speculation that since downside risks for the U.S. economy prevail the U.S. Federal Reserve will be unable to raise interest rates any time soon. On the other hand, Canadian exporters continue to benefit from the world's relentless demand for commodities and the Overnight Index Swaps market is pricing in about 50 basis points of tightening by the Bank of Canada over the next twelve months. Generally, higher interest rates make holding the Canadian dollar more attractive to foreign investors and the higher level of demand for assets denominated in Canadian dollars could place upward pressure on the value of the CAD. My recommendation is to sell USD/CAD at 1.0100 with a stop in a daily close above 1.0400 for a 300 pips profit potential.
Currency Strategist - Terri Belkas
My picks: Short USD/CAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1-3 Days
While we do currently see USD/CAD holding up above 200 SMA support at 0.9993 - not to mention the psychologically important parity mark - I think we could see the pair continue to ease down toward a rising trendline near 0.9900. Basically, USD/CAD has done nothing but range trade since the beginning of the year and since we've already seen the pair test the upper end of the range (1.03) in mid-June, the next logical move is down. Meanwhile, daily oscillators like MACD and RSI remain bearish, adding to evidence that downside potential remains. From a fundamental perspective, the Canadian dollar faces event risk this morning from the release of the Bank of Canada's Monetary Policy Report at 10:30 EDT. Given the hawkish sentiment contained in the Bank's policy statement following their decision to leaves rates steady at 3.00% on Tuesday, I think we could see a reiteration of this bias today, which could give the Canadian dollar a boost.
Currency Analyst - David Rodriguez
My picks: USD/CAD Short
Expertise: Quantitative Analysis, System Trading
Average Time Frame of Trades: 2-10 weeks
My USD/CAD short has started to show solid dividends, and I see little reason to shift my stance on the currency pair. Right now it seems that the USD/CAD is having some difficulty sustaining a push beyond 1.0000, but a short-term scalp could nonetheless prove profitable on a hold below 1.0050. A daily close beneath the pair's 200-day SMA at 0.9998 would harden my bearish stance, with subsequent price targets set at previous multi-month lows at 0.9823.
Currency Analyst - Ilya Spivak
My picks: Long CADJPY
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months
The Canadian dollar has been guided upward against the Yen in a neatly-defined channel since mid-March. Yesterday's price action yielded a Hammer candlestick directly at the channel's lower boundary. Support is reinforced by the 38.2% Fibonacci retracement of the 12/27/07-03/20 down move at 103.76, suggesting a bullish reversal is likely forthcoming. Look for confirmation in a bullish close on Thursday (7/17) candle to go long.
Strategy: Long CADJPY near 104.30-50 on Hammer confirmation, set stop-loss at 103.37 below recent wick low, target at 106.95.
Currency Analyst - John Rivera
My picks: Long USDCAD
Expertise: Fundamentals With Technicals
Average Time Frame of Trades: 5-10 Days
I am bullish the USDCAD as the fundamentals for Canada continue to weaken, which was reinforced by Dovish commentary from Governor Carney. However, I am puzzled by the lack of price volatility given the recent drop in oil prices. Therefore, I am extending my typical time frame as it may take time for the markets to catch up with the fundamentals. Upcoming leading indicators and wholesale data is expected to be bearish which may be the impetus to start a USDCAD rally. Parity seems to be holding as a significant support line, which could limit the donsie risk to the trade. My target is 1.0250.
DailyFX
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