Forex Investment and Currency Trading

October was an historical outlier for USD/CAD. The move from 1.03 to 1.30 was shockingly large. Hence a technical correction after such a move was not a surprise and helps explain the
USD/CAD sell off from 1.3017 to 1.1477. However, the retracement has run its course and conditions for USD/CAD gains have only been further reinforced.
The global economy is careening toward recession, as became clear last week when the IMF slashed the 2009 outlook for global growth from the 3.0% to 2.2%. That was the third downward revision since July’s projection of 3.9% growth. As global demand slows so will global [...]

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Brazil: The Monetary Policy Committee (Copom) minutes from the latest meeting confirm the difficulties of being a central banker in the present environment. Copom kept the overnight Selic rate unchanged at 13.75% on October 28-29. This follows four rate hikes in 2008 and breaks a rate tightening cycle that many in markets believed would extend to a series of as much as 400bps in hikes. The global financial crisis factored prominently in the decision process with the freeze in credit markets being deemed to account for: 1) dented consumer and business confidence; 2) a higher level of uncertainty; and 3) [...]

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Seven of the largest daily changes in USD/CAD history (to 1950) have occurred in the past few weeks. Historically, large moves (either way) were linked to an “event.” June 1, 1970 — CAD left the Bretton Woods system and became a floating exchange rate again. May 3, 1962 — CAD returned to the Bretton Woods system at a much higher USD/CAD after a near 12-year experiment with a floating currency. June 21, 1961 — the Coyne Affair, a period of open warfare between the Federal Government and then BoC Governor Coyne. The June 20 Federal Budget called for a weaker [...]

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USD/CAD hit 1.3017 on October 28 its highest level since September 2004, not coincidently as oil prices fell to their lowest level since May 2007 near US$60/b. Oil prices have since bounced toward US$65/b and USD/CAD has retreated from the peak, but the deteriorating growth outlook will limit any follow-through. The IMF’s base case for 2009 is for the global economy, at best, to just skirt a recession. Industrialized economies from the US to the UK, Germany, France, Japan, Switzerland, Sweden, New Zealand, and Australia are either in or teetering on the edge of recession, by the yardstick of two [...]

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USDCAD has sold off from a high of 1.2640 down to a low of 1.2275, but it’s starting to bounce back now.  The current move is likely M&A dominated as the EURCAD currency pair has had a very aggressive sell-off this morning, with USDCAD following suit.  There has been talk this morning of a Canadian company in the oil sand patch being a potential takeover target given valuations have become significantly cheaper with equity market weakness.
If you need to purchase some US dollars over the next few days/week, current levels are favourable relative to where we’ve been recently.  In addition [...]

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