The Canadian dollar is near the top of the FX heap once again today (trailing only AUD) as the market continues to digest the strong retail sales and CPI numbers from Friday.
There are only two trades in the Canadian dollar right now, long or on the sidelines. Look at CAD/JPY, which is breaking to the highest levels since mid-January.
CAD/JPY daily
It’s the same story right across the board. The Canadian dollar is the worst-performing major this year and the CFTC positioning data still shows speculators holding a large net short.
CAD CFTC net
It’s psychologically difficult to buy into a trade like the Canadian dollar at the moment but I still like it. One strategy is to buy a bit of CAD/JPY (or sell some EUR/CAD) with a small position and plan to add on a retracement. In CAD/JPY I like 94.50, in EUR/CAD 1.4670. I see more risk of a bounce in USD/CAD so I like 1.0800.
