Market Overview

Week In FX Americas – The "Fright Flight" of the Loonie

They say when the US sneezes Canada catches a cold. It would seem that the current crop of ‘loonie' trader's wish that could be true. If it were, it certainly would make trading the CAD more interesting. Instead, the market is offering up daily tight trading ranges and ‘cut and paste' market copy. Do not expect it to change so deep in the holiday season. We should expect the outlier trading spikes to be fuelled mostly by illiquid trading conditions.

So far, the CAD has managed to give back all of the previous nights gains and trades somewhat flatline heading into the weekend. With the loonie continuing to have strong ties with US fiscal cliff discussions, any sense of a setback in negotiations and the CAD is dropped like a hot potato for the regular safety of the USD.

The “fright flight” of the loonie tends to be short lived because of the relative hawkishness of the BoC and the currency's perception as a “Tier II” safe haven.

Dealers expect potential M&A activity to limit the ‘Big Dollars' allure along with cash interest to own the loonie at better levels. The remainder of this month has the potential to be a ‘logical' write off with outlier activities expected to dominate.

 
 

 

 

 

 

 

 

WEEK AHEAD

  • GBP Core Consumer Price Index
  • GBP Bank of England Minutes
  • NZD Gross Domestic Product
  • JPY Bank of Japan Rate Decision
  • EUR German Producer Prices
  • USD Gross Domestic Product
  • GBP Gross Domestic Product
  • CAD Gross Domestic Product
  • CAD Consumer Price Index

     

 
 
 

 

 

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex Markets Trading Ideas

 

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