Modest bump for CAD after Nexen deal but more is coming

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USD/CAD is slightly lower today but moves have been relatively tame so far.

On Friday, the government approved more than $20B in foreign takeovers. I spoke with Bloomberg about it and this basically sums up my feelings.

“This removes a huge amount of uncertainty in terms of the Canadian dollar and ultimately it sets the stage for medium term Canadian dollar strength through the end of the year, and down through 96” Canadian cents per U.S. dollar, said Adam Button, a currency analyst at Forexlive.com, by phone from Montreal.

The chart adds another reason to be bearish, and that would be even more true if we close below the Nov 7 low today (0.9875).

The recent bounce above parity coincided nicely with the 50% retracement. Other indicators like stocks and copper are also pointing to USD/CAD declines.

The main risk is volatility around the fiscal cliff. Cautious bears might consider using it to establish shorts at better levels.

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

2012-12-10T04:11:57+0000

All|Americas|Featured|Market Rumors|Regions

CAD|canadian dollar

Adam Button

3 Comments

  1. Makes sense that the cad would appreciate in the short term.

  2. I disagree. as long as 0.9860 holds I am still bullish usd/cad

  3. The most important thing is to be confident in your trade. If you don’t believe in your trades, you’ll never make money — so you’re off to the right start.

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