USD/CAD Extends Gains, 2017’s High In View
Shain Vernier • 1 min read
A perfect storm of fundamentals has hit the Loonie this month. Plunging WTI crude oil prices, a U.S. FED rate hike, the G20 signing of USMCA, and lagging Canadian economic metrics have all spelled doom for the CAD. At press time, rates of the USD/CAD are trending north in the neighborhood of 1.3600. Fresh yearly highs are becoming a daily occurrence, with 2017’s high point of 1.3793 quickly approaching.
During the U.S. pre-market hours, Statistics Canada released their Retail Sales (MoM, October) report to the public. Both Retail Sales (0.3%) and Retail Sales Except Autos (0.0%) came in beneath consensus expectations. These reports have not been well received by the forex, as illustrated by the CAD losing ground vs the Greenback.
Since the public signing of USMCA at the G20 by the U.S., Mexico, and Canada, the bull run has been on in the USD/CAD. Aside from a significant retracement on December 7, it has been up, up, and away.
Until the end of the year, here are three topside levels to watch for this market:
- Resistance(1): Psyche Level, 1.3600
- Resistance(2): Psyche Level, 1.3700
- Resistance(3): 2017’s High, 1.3793
Bottom Line: In the face of such a strong uptrend, I have little interest in shorting this market using only a psyche level as topside resistance. However, in the event we see 2017’s high challenged, selling may be a good opportunity.
For the remainder of the year, I will have sell orders queued up beneath 2017’s high at 1.3774. Using an initial stop at 1.3826, this short-term position trade yields 50 pips on a sub-1:1 risk vs reward management plan.