Trade Update: 2007-03-06 09:50
We just saw a lot of data released this morning out of Canada and the US. In Canada, Building Permits rose 11.3% versus the forecast of 2.1%, but traders waited until after the Bank of Canada Interest rate statement before trading. The BoC left rates at 4.25%, after which we saw whipsaw action and failure to penetrate 1.1800. USD/CAD sold off on the positive data and from the outlook from the BoC that it expects to run near production capacity throughout 2007 and 2008.
USD/CAD has dropped from about 1.1800 to 1.1750 (50% Fib level) and finding support there. Because of the data and statement from the Bank of Canada, we may see further gains in the short term, which goes against our long trade on USD/CAD and I will remove all open orders for the day.
Thanks for stopping by. Stay tuned for the next trade opportunity!
Trade Idea: 2007-03-06 00:05
We’ve seen a run up lately in USD/CAD which has mostly been attributed to a hit in commodity prices on global growth concerns. Will it continue? Well, tomorrow we have an interest statement from the Bank of Canada and a couple US economic reports that can cause some volatility in the market. The Bank of Canada is highly expected to keep rates at 4.25% and come out with dovish/neutral commentary afterwards, so we could possible see the uptrend in this pair continue.
On the chart, I’d like to jump into the uptrend, but at a better price. Using the Fibonacci retracement tool, I see we may find a support area between 1.1729 to 1.1766. The 61% Fib area lines up with the S2 line of the pivot point, so that may be the best area to go long.
Now, if the Bank of Canada raises rates, comes out with dovish commentary, or if US data comes out bearish for the dollar we all know technicals get thrown out the window, so please be very cautious during any of those scenarios.
Good luck and good trading!