The spot Canadian dollar reached a 15-day low on Wednesday against the U.S. dollar, dipping below $.76 for the first time seen since July 24, although pared losses to end at $.76111 CAD/USD, down 33 basis points. Since the Aug. 7 high of $.7711 CAD/USD, the loonie has fallen 1 cent or 1.3%.
Wednesday's move broke through support at $.76045 CAD/USD, which represents the 50% retracement of the move from the June low to the August high, after testing this level for the third time in four sessions, although today's move saw a recovery to end above this level. A sustained move below this support could lead to a further move to a test of $.75793 CAD/USD, the 61.8% retracement of this same uptrend. Further support lies at the upward sloping trendline drawn from the June 22 low, with support currently pegged at $.75686 CAD/USD.
The blue bars of the histogram in the first study shows investors or noncommercial traders paring their bearish net-short futures position for the fourth consecutive week to 24,898 contracts as of Aug. 7, down 53% from the 52,887 contracts held as of July 10. Late-week weakness, seen last week, points to the possibility that this short-term trend may be broken when Aug. 14 data is released on Friday.
While not shown, the Canadian dollar's seasonal trend is also a bearish factor that can weigh on this exchange rate. The five-year seasonal average (2013 to 2017) calculated on ProphetX points to a seasonal high reached in September with a downward trend in the exchange seen into December. This is confirmed by equityclock.com that shows a seasonal downtrend in the Canada-U.S. exchange rate from mid-September through mid-December based on 20-year averages ending Dec. 31, 2017.
DTN 360 Poll
This week's poll asks if you think that Canada should play a role in addressing global human rights violations in other countries when it could affect Canada's international trade, such as is currently experienced with Saudi Arabia. Please weigh in with your thoughts on this poll, found at the lower right side of the DTN Canada Home Page.
Cliff Jamieson can be reached at email@example.com
Follow him on Twitter @Cliff Jamieson
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.