Pick of the Day: USD/CAD – Close Trade

Close Trade: 2007-06-21 12:00

Philly Fed Index came out much stronger than expected at 18.0 versus 4.2 in the previous month. This is not good for our trade so I will close at market at 1.0730 to reduce our loss.

1st Half: -30 pips
2nd half: -10 pips
Total: -40 pips

Trade Update: 2007-06-21 10:35

Canadian Retail Sales came in lower as expected by the market with headline in at +0.4% and the core number at 0.0%. As I hoped, USD/CAD rallied up to our entry level, triggering both of our entry orders, before stalling for a bit.

We do have one more event risk today with the Philly Fed Manufacturing Index at 12:00 pm EDT today. I may choose to close our position, or maybe a portion of it, to reduce our risk ahead of the announcement. Stay tuned!

Trade Idea: 2007-06-20 23:55

PoD Chart

Looks like we’re going to hit up the Loonie one more time this week as we may see some volatility off of tomorrow’s Retail Sales data. As I’ve stated many times before, I think the market is still bullish on the Loonie, and if Retail Sales data comes inline or stronger, we will probably see a move down to its previous low on the 4hr chart at about 1.0615.

Of course, a weaker number will add to the concerns of weakening oil prices and the disappointment of yesterday’s wholesale sales number. In this case, we will probably see USD/CAD rise. I think this scenario would give us a chance to buy some Canadian Dollars at a better price as my outlook is very Loonie bullish on a possible, near term rate hike. I will focus tonight’s trade on this scenario:

Short half position USD/CAD at 1.0700, stop at 1.0740, pt at 1.0670

and

Short half position USD/CAD at 1.0720, stop at 1.0740, pt at 1.0690

Remember to never risk more than 1% of your position on any single trade. Adjust your position sizes accordingly.

Good luck!

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