Very nice work Ivan. Where do you thing the pair will be heading now? I'm suprised at the strength since the Canadian dollar is seen as a petro currency.
If eco reports in Canada continue to show inflation is in check and thus no signalling of near term rate hikes (like yesterday CPI), i see a test of Nov highs in the 1.1985 range. If the upcomming electios results in another minority gov't, that area could be hit much sooner than later. Just my .02
Now that the major downtrend line has been completely removed, it's headed up. We'll see mid 1800's I'm thinking, at which it will be time to start looking short - but only after the election.
Heh...well now, that was some "correction". Apparently a US house sold a yard of USD/CAD. I bought in right back down at .1643. Would have loved to play that down move, but alas, we cannot have all our wishes fufilled.
I'll be looking to see if a trend materializes post Jan 23 election. Given apparent tameness of Canadanian politics not holding my breath, but seems post every recent major election an FX trend established itself. Most recently post-Koizumi referendum vote (note Yen collapse post election.)
Canadian dollar sagged 0.5% yesterday, even in the aftermath of data supporting the notion that the Bank of Canada has further to go: could it be pre-election jitters as Canadians get set to probably change governments for the first time in nearly 13 years? Look at the historical record â we looked at the last 4 times we had a government turnover in Ottawa: Net-net â the FX market doesnât like change, no matter who wins; the policy uncertainty acts an overhang. Each time the CAD was weaker within a month, and by an average of nearly 2%: ⢠Oct 25/93: Liberals win. Canadian dollar on day of election is 1.3095. Next day is 1.3207. Week later is 1.3160. By end of November is at 1.330. ⢠Sept 4/84: Tories win. Canadian dollar on day of election is 1.2995. Next day is 1.3044. Week later is 1.3163. By mid-October it is at 1.3272. ⢠Feb18/80: Liberals win. Canadian dollar is 1.1597 on day of election. Next day is 1.1552. Week later is 1.1504. But at end of March is trading at 1.1925 (not a typo). ⢠May 22/79: Tories win. Canadian dollar is 1.1585 day of election. Next day is at 1.1569. Week later is 1.1608. By the end of June is at 1.1680. Letâs add that we believe any post-election decline in the loonie is likely to be brief and a buying opp: bottom line is that Canadaâs fundamentals are strong, as highlighted by the twin budgetary and current account surpluses, commodities remain in a full-fledged bull market, the Bank of Canada is in tightening mode and fiscal policy is set to loosen, which is always and everywhere a combo that is positive for a nationâs currency, and once foreign investors sit back and take note that Mr. Harper (i) has a fiscal tax-cut/spending increase plan that has received the blessing from the Conference Board in terms of costing-out the measures to ensure that surpluses are maintained, (ii) is chief of the most pro-market and pro-business party in Canada and (iii) is seen as being friendly towards the US Administration, any interim weakness in the Canadian dollar is likely to be quite brief. That said, in the real of day-to-day FX trading, the 4 out of 4 outcomes cited above should probably not be ignored, at least in the days following the vote.