Canada Markets

The spot Canadian dollar's exchange with the United States dollar reached a recent high of $0.7523 CAD/USD on Feb. 2 while has trended lower since, breaking below chart support on Feb. 22.

Feb. 22 trade saw the loonie close lower for the sixth time in seven sessions, ending 17 basis points lower against the USD at $0.7371 CAD/USD. This is the lowest trade seen since Jan. 6, while this week's close in the spot dollar could be the weakest seen in nine weeks.

The move began with a 69 basis points drop in the week of Feb. 13, which resulted in a bearish outside bar printed on the weekly chart (not shown). In addition, the stochastic momentum indicators on the weekly chart crossed and moved into a down-trend, also not shown on the attached chart.

Today's move broke below the 61.8% retracement of the move from the December low to February high, calculated at $0.7384 CAD/USD, which may open the door for a continued move to the December low of $0.7297 CAD/USD.

The same move also resulted in a breach of trendline support, also calculated at $0.7384 CAD/USD, which could result in additional selling.

The histogram bars on the first study show that speculative traders have held a bearish net-short position in the Canadian dollar for 18 consecutive weeks as of Jan. 24, the last report released by the CFTC. On Friday, Feb. 24, the CFTC intends to release the following week's report, or the report due as of Feb. 3, with data covering positions as of Jan. 31. Subsequent reports are to be expedited following this date.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @Cliff Jamieson

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