Forex Investment and Currency Trading

Softer oil prices and the generally stronger USD tone – most currencies except the JPY are down against the US currency this morning – are keeping the CAD tone on the defensive. The CAD has been one of the weakest performing of the major currencies over the past week, with only the lowly pound faring worse, likely reflecting the build up of long CAD positioning amid increasing speculation of a push towards parity. BoC Governor Carney’s comments last week underlined the central bank’s ongoing focus on the currency and with Governor Carney speaking again today, the markets will retain a [...]

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Over the course of the last week, the Bank of Canada has reiterated its concern with the strength of the Canadian dollar, the Department of Finance has published larger and longer-lasting fiscal deficit estimates, and we’ve seen continual federal election chatter in the Canadian media. And yet, USD/CAD has been moving lower, and came within spitting distance of its 4 August lows earlier this morning. Clearly the momentum in USD/CAD is pointing downwards, no matter what is standing in its way.
Looking at the most recent developments, and starting with the Bank of Canada’s statement last week, the language on CAD [...]

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There is not much evidence of a strengthening in risk appetite in the markets this morning and the CAD is suffering as a consequence; risk on or off remains a big driver of currency movement in the majors it seems, even if there is evidence to suggest that the correlation between the USD’s broader performance and (equity market-driven) risk appetite has weakened in recent weeks. Oil prices have slipped a little further overnight but on the whole, news so far this week has been more CAD-supportive than anything else, some tend to think – June’s GDP printed positive for the first [...]

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Comments from Canadian officials earlier today in China have not had much impact on the CAD. Finance Minister Flaherty said that the government “has always expressed concerns with respect to rapid fluctuations” in the CAD but in discussions with Chinese officials, both parties agreed that international currency issues should “take a back seat” until the global economy was back on its feet. While that might give the impression of downplaying Canada’s recent concerns about currencies, it perhaps suggests more accurately that policy makers will continue to focus on currency issues as they relate to domestic – rather than international – [...]

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