Canada Markets

The Canadian Dollar reaches a fresh Low

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The spot Canadian dollar gained 47 basis points against the USD in the week ending Oct. 7, the first weekly gain in four weeks, ending near the lower end of the week's range. The histogram bar on the first study shows the noncommercial net-short position in the Canadian dollar falling to 21,407 contracts as of Oct. 4, the largest bearish position since Oct. 2020. (DTN ProphetX chart)

The Canadian dollar showed volatility in early week trade, moving over a 52-basis point range on Monday while closing 24 basis points lower at $0.7242 CAD/USD. Monday's low of $0.7231 CAD/USD reached its weakest trade against the USD since the week of May 26, 2020, or over two years.

Potential support on the weekly chart is seen at $.7206 CAD/USD, which is the lower end of a gap in trade on the weekly chart formed in the move from the week of May 18, 2020, to the week of May 26, 2020. The $.72 CAD/USD level may act to support this exchange, while the 78.6% retracement of the long-term move from the March 2020 low to the June 2021 high is found at $.7166 CAD/USD (horizontal green line), which may act to provide a further slide to the 2020 low.

As seen in the first study, the blue histogram bars show noncommercial traders or investors increasing their bearish net-short position in Canadian dollar futures by 3,741 contracts in the week ending Oct 4, with the bearish net-short position of 21,407 contracts the largest seen in two years.

According to's 20-year seasonal chart, the Canadian dollar tends to reach a seasonal high in October with weakness seen over the balance of the year. According to their monthly average calculations over this period, the October trade averages 0.1% lower, the second of three months of the year that result in a bearish decline in the country's currency. This also includes a 0.5% drop in the month of January on average and a 0.6% drop in the month of November.

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