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Trade Closed: 2010-04-06 22:20

PoD Chart

Whee! The USDCAD hit parity finally! After holding on to this trade for almost a week, my second profit target at 1.0000 got hit. Yesterday’s downbeat FOMC statement served as a catalyst for the USDCAD to edge lower and hit a low of 0.9989.

Closed 1st half at 1.0075 : +65 pips
Closed 2nd half at 1.0000: +140 pips
Total: +1.71% Gain

It turns out the Fed officials are concerned that high unemployment and tight credit could restrain the US economy’s recovery, reinforcing the need for a longer period of low interest rates.

Trade Adjustments: 2010-04-04 22:20

PoD Chart

Loonie strength continued on Thursday, as the CAD got a slight boost from the GDP report. GDP growth was at 0.6% last month, slightly higher than the anticipated 0.5%. This helped the USDCAD move lower, testing near the former lows and hitting my first take profit in the process!

At that point, I moved my stop loss to my break even point, creating a risk free trade. My trade got a slight scare, as price retraced back up, almost triggering my adjusted stop loss when the NFP report came out. In any case, let’s see if the Loonie bulls have enough fuel to take the USDCAD to parity!

Adjust stop on remaining position to my initial entry point at 1.0140.

Trade Idea: 2010-03-30 23:25

PoD Chart

Right now, it looks like the pair is trading within a rising channel. Still, the overall trend is down, which is why I’m waiting for a break from the rising support line. After waiting for the release of the Canadian GDP data, I think if we see a break lower from last week’s low, this would give more confirmation that the pair is going to keep heading south.

I think it’s time to shift my fundamental stance on the USDCAD. Remember last week I took a USDCAD long, which, sadly, didn’t turn out well. It seems that the pair’s retracement is over now, and that traders will start bringing it down again… probably all the way to parity.

This could be for a couple of reasons. One, the BOC‘s outlook on Canada’s economy is wee bit rosier than the Fed’s outlook on the US. The BOC, unlike the Fed, has indicated that inflation is starting to pick up. Could this be a very early sign that the BOC is starting to think about rate hikes?

In any case, it seems that the current market bias is in buying Loonies, and the reports that will be released from both Canada and the US later could be the catalysts the Loonie needs to rally towards parity. If the ADP non-farm employment change and the Canadian GDP report come in better-than-expected, we could see risk appetite pick-up, which cause another round of Loonie buying.

I’m placing my limit order at 1.0140. Since this is going to be a day trade, so I’m placing a relatively tight stop loss of just 60 pips. I’m setting my first take profit point at last week’s lows at 1.0075. I’ll be leaving the other half of my position open to see if the pair can finally hit the magical 1.0000 mark.

Here’s the master plan:

Short USDCAD at 1.0140, stop loss at 1.0200, take profit at 1.0075 and 1.0000.

I’ve had some bad luck this week since I sprained my wrist and it’s been a chore doing everything with one hand. I can’t even cook properly! I guess this just gives me another reason to eat more candy. Sugar high!

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