Trade Closed: 2008-06-10 09:25
The Bank of Canada crushed expectations today as they hold rates at 3.00% on inflation concerns. Unfortunately, expectations of a cut pushed the pair higher and stopped us out before we could catch the Loonie rally after the announcement was made.
Total: -100 pips/ -1.0% loss
A little bit frustrating, especially after the BOC disappoints the market and send the pair moving in our direction, but we have to roll with the punches and take comfort in the fact that we stuck to our trading plan.
With the rate hold, I expect the pair to continue to move further down as now I think inflation will be the focus in Canada as well as the US. This will keep the interest rate differential in favor of the Loonie, and puts me in a short bias on the pair for now. Stay tuned!
Trade Update: 2008-06-06 11:59
Our trade was triggered during the morning European trading session as the pair rallied higher. It appears that 1.02 area has held and with a boost from this morning’s news on weak US employment data, the Greenback fell across the board, and pushed our position into positive territory.
Canadian job growth slowed as well, but for now the weaker US data will influence price action for now.
Oil received a boost on a weak US Dollar, climbing over $134 a barrel once again.
I will hold on for now, but it looks like it is going to be a tug of war around 1.02. Stay tuned for updates and adjustments. Good luck!
Trade Idea: 2008-06-05 17:05
Greetings! Today we will take a look at the daily chart on USD/CAD for a possible short trade opportunity on a technical setup.
On the chart, we can see a pattern of lower highs as the pair finds resistance at the trendline drawn. We are back at the trendline and it looks like yesterday’s price action is indicating that market has stalled its move higher with the “doji” like candle formed. Stochastics are indicating the pair may be short term overbought and ready to reverse.
Of course let’s take a look at current fundamentals. According to Fed chairman Bernanke, US interest rates are where they need to be for now to stimulate economic growth. Will growth continue to be the Fed’s focus, or is the rise in inflation we are feeling around the world going push the Fed to rate hikes? In Canada, it looks like growth will slow, which may prompt the Bank of Canada to cut interest rates once again.
Now, this is all priced into the current market, but will it continue to support and push the currency pair higher? We’ll have to wait and see, but I think that the choppiness may continue for now and we’ll see the pair do a short term turn around as traders jump in on the range play and on profit taking.
So, I’d like to short but get in at a better price at 1.02… let’s see if volatility will take us there…
Short USD/CAD at 1.0200, stop at 1.0300, pt1 at 1.0100, pt2 at .9900
Remember to never risk more than 1% of your account on any single trade. Please adjust your position sizes accordingly.
Stay tuned for updates and adjustments. Good luck my friends!