In what has been termed "creeping uncertainty," the Canadian dollar posted a weekly loss for the fifth time in seven weeks last week, ending 156 basis points, or 2%, lower (spot dollar) over the week, the biggest weekly loss seen in over one year.
As seen on the accompanying weekly chart, last week's low was at $0.7636 CAD/USD, below potential support of the 61.8% retracement of the move from the May 2017 low to September 2017 high, while a sustained move below this level could result in a further slide to $0.75899 CAD/USD.
As seen on the histogram of the first study, investors have pared their bullish net-long positions in the Canadian dollar for five straight weeks to 19,420 contracts as of March 12. This is the smallest net-long position held in eight weeks, while the week-over-week reduction of just 145 contracts was the smallest change seen over this period.
Traders in the Canadian dollar may show caution ahead of this week's Federal Reserve decision on Wednesday, while ongoing concerns lie with the ongoing risk of failure in the ongoing NAFTA talks. In the words of one currency trader, failure to reach an agreement could result "a race to the bottom" for the county's currency.
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