Global uncertainty continues to weigh on the Canadian dollar, with the May 9 close for the spot dollar down 47 basis points to $0.7701 CAD/USD. Today's move took out the 2021 low reached in December, while reaching the lowest trade seen since November 2020. This follows six consecutive weekly losses that has pared 269 basis points from the exchange with the United States dollar.
Since July 2021, Canada's currency has traded in an overall sideways direction, ranging from a high of $0.8120 CAD/USD reached in October to a low of $0.7716 CA/USD, reached in December. Three rallies during this period all ended in a move back to the support of the 38.2% retracement of the move from the March 2020 low to the June 2021 high, calculated at $0.7759 CAD/USD.
The May 6 weekly close was the first close below this support during this period, while May 9 trade added to these losses. This could lead to a continued move to the 50% retracement found at $0.7586 CAD/USD.
The lower study shows investors paring their bullish net-long futures position for a second week as of May 2, while at 9,029 contracts, is now the smallest bullish position held in four weeks. The week-over-week change in the size of this position is 11,852 contracts, which is the largest bearish change seen since July 2021 and bears watching.
Cliff Jamieson can be reached at firstname.lastname@example.org
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