Canadian Dollar Targets Breakout
USDCAD – Our Speculative Sentiment Index shows that traders remain aggressively net-long the US Dollar (ticker: USDOLLAR) against the Canadian Dollar, giving us consistent signal that the USDCAD may trade lower. Impressive Canadian economic data sparked further USDCAD declines, but ultimately a failure to break below C$0.9900 limits our enthusiasm for USDCAD short positions.
As we wrote last week, “a bearish market that isn’t declining isn’t bearish at all.” We could certainly see a major USDCAD breakdown, but the Dow Jones FXCM Dollar Index threatens to break to fresh highs. Such a broader US Dollar rally could effectively limit any Canadian Dollar gains against its US namesake (USDCAD losses).
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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