Canadian Dollar May have Set Significant Price Low
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USDCAD– Retail FX traders remain extremely short the US Dollar versus the Canadian Dollar, and we will most often take this as contrarian signal that the USD/CAD may continue higher. Yet a notable shift since last week warns that we could see the trend slow or even reverse through near-term trading.
Our data shows that there remain two open short positions for every one long—a heavily one-sided skew. It was nonetheless just a week ago when the data showed nearly four short positions per long; open long positions surged 45 percent while short positions dropped 24 percent.
This substantial shift occurs just weeks after aggregate positioning hit its most net-short since at least 2011. And indeed, a sharp turn from such one-sided extremes acts as early warning of a potentially significant turn in trend.
See next currency section:AUDUSD - Australian Dollar Likely to Continue Lower
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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