Yesterday I wrote about another day, another big figure in USD/CAD.
Well, today’s another new day and here we are breaking another big figure as stops were blown out above 1.27 in a flash move to 1.2744 from 1.2655.
The driver was the November monthly GDP report as it contracted 0.2% compared to a flat reading expected. The year-over-year rise was 1.9% compared to 2.1% expected.
The data is ancient history by this point but it’s a taste of the early effects of the plunge in oil prices. It’s not too early to say the ‘R’ word, as in recession.
October GDP was +0.3% and Nov is -0.2% so the December number will be key and with all the layoffs and continued weakness in oil to start the year, it could be tough times in Canada.
In any case, USD/CAD is absolutely soaring as money flees Canadian dollars like they were rubles.
I wrote yesterday that “I think 70-80 pip dips are to be bought”. The dip from yesterday’s high to the low was 72 pips.
Update: The move continues to extend to 1.2798. This looks like a panicky, capitulation sort of move. It’s not justified by a dated GDP report but it shows the extreme rush out of Canadian dollars. Never fade a parabolic market but I don’t like chasing it either.
The weekly RSI is at 89 and the daily and hourly studies are both above 85. Even during the height of the credit crisis, the loonie was never this oversold.
