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Retail Heavily Short Loonie
Looking at the latest market data, retail traders are currently holding a roughly 80% short position in USDCAD making this an interesting pair to watch today. USD saw a return to strength yesterday as ongoing market turmoil finally translated into safe-haven inflow for the Dollar. With Fed hawkishness expected to have reduced on the back of the recent inflation drop and the ongoing financial stability concerns plaguing the global banking sector, USD has found favour once again.
USD Supported
With risk markets highly vulnerable to further losses on any negative headlines, USD should remain well support ahead of next week’s FOMC meeting. Rather counterintuitively, USD might well end up being better bid next week should the Fed opt for a smaller hike or hold off hiking altogether.
CAD Under Pressure
CAD has been on the ropes amidst a fresh plunge in oil prices. The broad risk-off tone to markets this week has seen oil prices dropping to 2021 levels, hitting CAD income streams hard. CAD has been on the backfoot recently given the recent BOC rates pause which has seen capital moving elsewhere. With these themes likely to continue near-term there is plenty of room for a fresh leg higher in USDCAD.
Technical Views
USDCAD
The retest of the broken 1.3683 level has seen the pair turning higher again, still within the recent bull channel. With momentum studies turning bullish, the focus is on a further push higher and a break of the 1.3839 level highs targeting a move up to 1.3974 YTD highs.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.