Close Open Orders: 2008-03-05 14:16
Looks like traders decided to buy back Canadian Dollars before we could hit parity as the pair trended lower during the Europe/US overlap. The Dollar is out of favor once again today as we saw a broad sell off this morning against the majors. This may be the next leg of Dollar selling, so I have decided to close out our open orders and look for a new opportunity.
Close Open Orders. No trade.
I should also note that oil is back up above $103 and gold is making new highs as well. It appears there may not be a slow down in commodities just yet. We will continue to watch the comdolls, so stay tuned for a new idea!
Trade Idea: 2008-03-04 14:39
After taking a look at the chart and fundamentals, I think this rally was a correctional move capped off by the BOC rate cut. With that behind us now, I think traders will get back into the business of selling Greenbacks against the Loonie.
Fundamentally, there are still many factors that make the Loonie a bit more attractive than the Greenback. We have record oil and commodity prices rocking the global markets. This should support Canadian exports and the Canadian Dollar for the time being. Even with today’s rate cut from the BOC, interest rates in Canada are .50% higher than in the US.
There is still speculation of further rate cuts from the BOC on the effects of the US slowdown will have on the global economy. For now, I think the focus is back on the Fed and what will happen at the next Fed meeting.
On the chart, today’s move has brought the pair to a rising trend line that I drew on the daily chart. It is support turned to resistance and it may hold as it lines up with the 61% Fib level drawn and the psychologically significant level of 1.0000 (parity). Stochastics are coming out of overbought levels indicating that this run has lost its footing.
We have more event risk to look forward to this week for both the Loonie and the Greenback. Be ready for some volatility, especially after this Friday’s employment data from both the US and Canada. Good luck my friends and stay tuned!