Canadian Dollar Likely Topped versus US Dollar
USDCAD – Currency trading crowd sentiment has been exceedingly choppy on the US Dollar/Canadian Dollar pair, giving unclear signal for where the pair may be headed through short-term trading. Last week we highlighted the fact that crowds remained net-long the US Dollar against the Canadian Dollar since the pair traded near 1.05, but the first flip to net-short since September, 2010 gave strong contrarian signal that the pair may have bottomed. More recently long interest has built significantly—up 22.9 percent overnight and 22.2 percent above the same levels from last week.
The build in longs leaves our SSI ratio at 1.91 as approximately 66 percent of traders are long. Short positions are a modest 3.1% lower than yesterday and 5.1% weaker since last week. Open interest is 12.5% stronger than yesterday and 5.5% below its monthly average. The SSI is a contrarian indicator, and the dramatic month-over-month moves in sentiment suggest that the USDCAD may have bottomed. But the shorter-term picture is clouded by the fact that long interest has built significantly overnight.
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