I went long at 1.1020, a big bundle, and I'm having a good time. Have set a target of 1.1300, when we get close I may set a stop at around 1250 and go for 1500. I'm hedging with long positions in EURUSD and GBPUSD, both of which are now recovering from their recent swoon, also AUDUSD, which is inching up towards .86 imho, and I play the USDJPY carry-trade yo-yo, shorting at around 120.20 and buying back around 50 pips lower. USDCHF is also making a comeback; I short it when it gets too carried away with itself and thus mainain my dollar-neutral portfolio. Let the Fed do what it wil .... Didn't Papa Bear say about oil and the loonie?
Heh I dont want to assume about what commodities are in play and how the usdcad lags ... However I am suspicious on how the audusd does not experience a similar lag. I still believe the spec shorts on usdcad are easing because there are no renewed signs of Canadian inflation. Bascially canadian inflation might be a fluke. But with commodity prices still high I think a decent valuation without spec shorts would be at 1400 - 1600s in anycase I missed the top this friday in the high 60s ... looking to buy pullbacks in the teens and 20s but will reconsider the usdcad long if there is a sustained dip below 1100 i agree with your target of around 1300s ... loking to lighten up my longs if we get in the mid 1200s
yeah, i missed the top too. Actually made quite a mess of the day - went short at 1152, regretted it when it started going up again and went long at 1155, shorted again at 1150 with a 9-pip trailing stop which got tripped at 1133, then went away to bash my head against the wall and remind myself I dont do that stuff any more. However my AUDUSD and USDJPY positions made a nice profit and EURUSD and GBPUSD are both climbing out of the pit. USDCHF seems to be climbing (it should - Swiss interest rates are almost as low as Japan's, don't understand why it's been tanking so long. The US can't buy that many cuckoo clocks, surely. But my current policy is to be long on USDCAD and short USD against everything else, so I'm rowing against the tide in USDCHF, setting limit sells at ridiculously high prices with modest targets. Needless to say, no action today. AUDUSD is a different beast, partly driven by carry trade, and the Aussies don't sell oil to los Yanquis. Oil is not only the biggest single component of the US trade deficit with Canada, but roughly correlates with resource speculation in general. The economics are simple: they buy our oil, they pay us in USD, if we think the USD is going up we put them in our USD accounts and hang tight, if we think it's headed down we dump them asap. However, companies doing business in Canada need to buy loonies to meet payrolls, pay suppliers, etc: they need their loonies when they need them, regardless of what the currency market is doing. Of course they can hedge with futures, but on the spot market you have a lot of necessity trading, which provides those of us who do it for fun and profit to - well, have fun and make a profit. There is BTW a .93 correlation between the loonie and MMA spot oil. What counts is not the spot price but the pooled monthly price, which determines (has a major influence on?) how much USD the oil cos are swimming in. Spot prices by themselves dosn't have much influence, but as they pull the MMA up or down, they are good indicators of what this month's pooled price will end up being. Hence the lag. Interest rates are a minor contributor to USDCAD. There has been exactly a 1 point gap between the two for a year now, and USDCAD has been all over the map. Now how the specs react to interest rates and rumours about interest rates is another story .... Remember the big swoon last July set off by the fact that the Fed DIDN'T RAISE RATES. Wow. Non-news, and it set off a massive chain reaction. I play USDCAD because it's relatively simple and in the long run predictable, because the economic relationship between the US & Canada is fairly simple. On everything except resources, our trade is pretty even, and so are financial flows. The US goes into recession, so do we. They boom, we boom. Not exactly in synch, but more so than any other 2 major countries on earth. Even all the M&A talk is mainly just talk. When people buy our companies, what do we do with the money? We use it to buy their companies. Alcoa will end up owning Alcan, and Magna will end up owning GM. A 1% interest rate differential isn't exciting: the carry trade players would rather get into NZDJPY, where the differential is 7%, or AUDJPY at I think 5.75%. Dont play AUDJPY myself, but I notice it broke 100 on Thursday. I use IB, and they don't offer NZDJPY, and if they did, the spread would be ferocious. 'Swhy I don't play crosses as a rule. Everyone agrees the loonie is a resource-based currency, even the Bank of Canada, & The Economist called it a "petro-currency". So this is not just me theorizing. BTW, when we bitch about the specs - that's us we're talking about.
What brings you to that conclusion? When IB launches NZD support soon, their spread will most certainly be tighter than the other FX shops (if IB's other FX spreads are any consideration).
True, but crosses are always wider. They quote most majors in half-pips now, and the spread is usually 1 or 2 pips. I expect NZDJPY will be more like 5-7 pips, tighter than anyone else but not by IB standards.
IB doesn't do NZD. But for an indication of what the spread will be like for NZDJPY if/when it does come onstream, consider USDSEK (28-34 pips) and EURSEK (23 pips). We're talking about similar-sized, stable first-world economies.
Would be better off making the NZDJPY crossrate yourself. EURSEK spread on IB is often down as low as 8-10 pips once europe opens. USDCAD down again yesterday, where are ya outlaw?? Best regards, MK
I bought my longs at 1020, so I'm still up and hanging in there. I'm down to up only 4% on the month, was up 13% at one point. But then all my hedging positions have been going the wrong way, too, so there's either a disaster in the making or plenty of upside, depending on how you look at it. (By hedging positions, I mean I'm long EURUSD and GBPUSD and short USDJPY, with a limit buy order in for AUDUSD and a limit sell for USDCHF. I'm still expecting 1300 by the end of the month: I can't see any rational reason for USDCAD to be this low. One thought is that it has to do with Magna's bid for Chrysler: maybe the little zoom up to 1164 was Magna buying Chrysler stock, and once the deal fell through they dumped it again. Except if they dumped the stock, why wouldn't they hang on to their USD? This is surely a lousy time to be buying loonies.
gspaul, I can echo your ideals concerning the market's irrational behavior, but markets everywhere are behaving irrational - not just USD/CAD. And it will continue, as this pair shows no indication of changing tune. My advice, simple as it may be, is simply ride the trend until it ends. But trying to bottom pick with this pair in particular has always been a nasty and frustrating business.