Canadian Dollar Forecast to Decline
The majority of retail traders remain long the US Dollar (ticker: USDOLLAR) against the Canadian Dollar, but an important shift in crowd sentiment led our “Tidal Shift” strategy to go long USDCAD from C$.9700.
There are currently 2.15 retail traders long the USDCAD for every one that is short, but that ratio represents a significant moderation from last week. Long interest has dropped 21 percent while short positions more than doubled at +103 percent.
We don’t often advocate joining the crowd as they remain aggressively net-long a given currency pair, but the sharp shift in sentiment serves as important warning of a potential USDCAD bottom.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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