Inside the Currency Market: USD/CAD

USD/CAD’s story remains the same. Since the break of vital 1.1900’s last May, USD/CAD built in supports as it bolted 1400 pips to Aug 22 highs at 1.3346. Current bottom is found at 1.3200 and range breaks at 1.3213, 1.3151, 1.2617 and 1.2708.1.2396. Most important breaks occur at 1.3151 and 1.2708 since those breaks below would see a deeper CAD correction. To head higher, breaks must occur at 1.3318 and 1.3382 to target 1.3731, 1.3848 and 1.4197. Cad has easy ability to head far higher as 1.4197 is barely middle range on a long curve. Further out targets include 1.3367 and 1.3423. The last Cad strategy to buy dips at 1.3000’s and head to upper 1.3200’s saw Cad jump to 1.3308 highs and just shy of prior peaks at 1.3346. The CAD driver this week will be Big Sis Yellen’s decision to raise or not raise. So far, I don’t see a raise because every Fed interest rate remained at current levels or dropped. Fed Funds couldn’t even manage 0.15. That situation doesn’t bode well for a raise unless Yellen surprises the market and raises anyway. We must hear from Yellen a bullish statement to continue to buy CAD dips for the eventual break of 1.3346. The economy is growing, slack in the economy is dissipating, labor markets growing, we will raise this year. Without a bullish statement, USD/CAD drops and we look for lower supports. Interesting comments in the BIS Quarterly review. The longer Yellen and other central banks wait to raise then the more damage will be done over the long haul.

USD/CAD. Bottom. 1.3200, Range break above 1.3318, Below 1.3213. Overbought sell point 1.3314 – 1.3322. Strategy. Long above 1.3267, target 1.3314. Target met at 1.3322 then reverse short to 1.3294. Target at 1.3314, reverse short to 1.3290. Points on the way up, 1.3274, 1.3278, 1.3296, 1.3314, 1.3322.

Shorts below 1.3265, target 1.3232. Watch here for reversal to 1.3266 and higher. Points on the way down, 1.3261,1.3257, 1.3248, 1.3239, 1.3200 Bottom. Point 1.3232 must cross to head higher.

Brian Twomey, Inside the Currency Market, btwomey.com

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