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We see a long USD/CAD Play – Trade of the Day

After a very dovish Bank of Canada (BoC) following comments from the governor, Stephen Poloz during last week’s monetary policy report; we comfortably tilt to a weaker Canadian Dollars (CAD) bias. More so, historically there is a trend of the CAD with house prices and with current damming trend in housing prices in Canada, we expect further weakness in the CAD. Not forgetting the recently bullish sentiment in the USD, we strongly see a long USD/CAD in our portfolio mix.

Technically, price is currently trading in a near-term resistance zone (highlighted in grey) [see H1 Chart]; should price find support at this former resistance zone, this further gives us technical consolidation to buy USD/CAD.

 

Fig 1: Hourly (H1) USD/CAD Chart

USD/CAD

Buy @ current market price (instant execution)

Stop: 1.343685

Limit: 1.350790

 

Conversely, the risk to downside play here is majorly dependent on a USD weakness – there are several significant US macro-data due this week and material downbeat in these data can alter bullish bias in the greenback, thus nullifying our outlook at least on the shorter term. Hence, we advise that clients and traders always use a stop loss.

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