Canadian Dollar Hits the Skids, Losses Likely
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USDCAD – A sharp move in Canadian Dollar positioning warns that the USD/CAD may have set an important short-term low. In the last three weeks we’ve admittedly said much the opposite as the pair rallied to fresh highs. Yet our retail FX trader data warns that the US Dollar may instead trade lower versus its Canadian counterpart.
Current positioning shows there are 1.3 open retail USD/CAD-short positions for every one that is long, and a contrarian view of crowd sentiment leaves us looking in the opposite direction. Indeed it was just seven days ago that the opposite was true—most were long. The abrupt turn warns of further near-term USD/CAD gains.
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Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.