The Canadian dollar traded within a narrow 21-basis-point trading range over the past eight sessions, while Wednesday's trade saw the spot Canadian dollar finish 42 basis points lower at $0.7609 CAD/USD, the largest one-day loss realized since Dec. 6. Trade reached the lowest level seen in 18 sessions, while is nearing a test of support.
Traders did not like what they heard with the Bank of Canada's rate announcement on Wednesday, with the country's benchmark rate left unchanged at 1.75%. The report's press release was viewed as pessimistic, with continued concerns of global trade issues and uncertainty, and the door left open for future rate cuts. As well, weakness in crude oil, which could grow due to concerns of the coronavirus in China and slowing demand for air transportation, could weigh further on the Canadian dollar.
The lower study on the attached chart shows that noncommercial traders have held a bullish net-long position in the Canadian dollar since the week of July 2, 2018. Meanwhile, the most recent CFTC data shows this group increasing their bullish net-long position for a third consecutive week to 32,852 contracts, the largest net-long position in nine weeks. This group has no doubt faced a change of heart and have contributed to the weakness.
Nearby support on the daily chart is seen at psychological support of $0.76 CAD/USD, while a late December low at $0.7591 CAD may also be tested soon. Today's move has resulted in a breach of the 50% retracement of the move from the contract's November low to Dec. 31 high at $0.7610 CAD/USD, which could clear a path for a further move to $0.7585 CAD/USD, the 61.8% retracement level (not shown).
DTN 360 Poll
This week's poll asks what crop you are most likely to hold this crop year in hopes of higher prices? This poll can be found on your DTN Canada Home Page. We thank you for your interest.
Cliff Jamieson can be reached at email@example.com
Follow him on Twitter @CliffJamieson
© Copyright 2020 DTN/The Progressive Farmer. All rights reserved.