NEWS / Foreign Exchange

Canadian Dollar in the Headlines

In my letter to clients of April 2, I was writing:

'I saw a headline today on Bloomberg, 'Canadian Dollar Declines From High as Charts Indicate Currency Overbought. Canada's dollar fell from its strongest level this year as some traders speculated the currency's recent gains were overdone.' A very 'technical' headline, particularly for Bloomberg.
 
I believe the Canadian Dollar is probably not that weak. I do not perceive a sound change of market forces having already taken place in the USD/CAD - in simpler words, I do not recognize a notable low in the USD/CAD, yet.'

Since April 2, the USD/CAD sank for about 300 pips more. The pair is coming down closer to the level I went long last year on May 31. And, just like in the days immediately prior to May 31, 2006 - my interest in the USD/CAD nowadays links to the possible appearance of a notable point of price inflection.

As a note of curiosity - there is a strong similarity that can be noted between the shape of the USD/CAD's movement since February 8 (this year), daily chart wise, and the shape of the EUR/USD's movement recorded during the first months of 2005, again daily chart wise.