Canada Markets
Canadian Dollar Breaks Support
The Canadian dollar tumbled for a fourth consecutive session on Monday, trading as low as $.74665 CAD/USD in electronic trade for the December contract, down from a high of $.77035 CAD/USD last week.
The Canadian dollar broke through the resistance of the lower end of a channel which has been in place since the December contract reached a high on April 29. Monday's move below $.7495 marks a bearish breach of this channel, while may point to the potential for a further move lower to a test at $.74285 CAD/USD, the 50% retracement of the move from the contract's January low to April high.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
The middle study shows the daily stochastic indicators which continue to trend sharply low, although have yet to fully reach the over-sold territory (below 20), indicating that a further move may be in store. It is interesting to note that since September, upward momentum has been challenged to sustain a move beyond the mid-point of the neutral zone on the daily stochastic chart.
The red bars on the lower chart show speculators in the Canadian dollar increasing their bearish net-short futures position for a fourth consecutive week to 14,298 contracts net-short, which is the most bearish position held since late March. This follows a 25-week period from April through September when investors held a bullish, net-long futures position which is the longest stretch of a net-long holdings since late 2012/early 2013, according to weekly CFTC data.
The final two months of the year tend to reflect seasonal weakness in Canadian dollar trade. ProphetX points to the five-year seasonal average in decline through November and December. As well, Thackray's 2016 Investors Guide reports the average monthly gain over the 1971 through 2014 to be minus .1% in October, minus .4% in November and unchanged in December. November is reported to be the weakest month of the year over this period.
Cliff Jamieson can be reached at cliff.jamieson@dtn.com
Follow Cliff Jamieson on Twitter @CliffJamieson
(ES)
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.
Comments
To comment, please Log In or Join our Community .