Pre News Trade USD/Cad

I would like to share with everybody my thoughts on a potential pre interest rate news trade.

I would consider going Long on the usd/cad @ 9.00 AM tommrow, with another Buy Limit at 50 points below the prelease with a Stop 100 Pips away. I would Hold my position for at least 400 pips.

My Reasons:

1) After Bank of Canada's Governor Dodge hinted of a rate hike the candadian $ Strengthned by over 400 pips vs the US$. at the same time the econmoy recorded the following :

a) CPI (YOY): Before hint of rate hike 2.50 , after hint: 2.20.
b) Un-employment Level: 6.1
c) Empoyment Change: Q1 (jan -March) of 2007: 164,000 New Jobs
vs Q2 of 2007(April-June): 59,000
d) GDP (MOM) : 0.0 % <<<No Growth at All>>>>>
e) Housing Starts:
Q1 (Jan-March) : 657 <<Note Winter Months>>
Q2 (April-June) : 652 <<Note Spring + Summer = Prime Time for cosntruction>>
f) Manufacturing Shipments : -0.60 Last reading on June 13th 2007.
g) Retail Sales: 0% Groth (Last Reading 21st June 2007)
h) The COT data shoes the commercials at an all time Short on the Looniee.

After analysing all the above I have come to tyhe conclusion that the stregth in the Cad $ is not backed by fundamentals. The Loonie does not even have a High Interest rate such as the KIWI or the Cable which would attract it to be the suitable pair on carry trades.

This, in my opnion is the speculators riding the Candian Strength beyond its limits. Now we just need some fundamental "reason" for the Loonie to change its direction, and I am inclined to belive its tommrows announcement.

Thanks for the fundamentals perspective.
The Daily Fozzy method is agreeing with you technically and giving a buy signal.

http://www.forexfactory.com/forumdisplay.php?f=87

The forecast was right, at least for the short term. I just pipped 34 small ones on it with close trailing stop.

The statement was dovish, ... I am expecting a musch bigger reaction, It could retest previous support ....However it according to me should not Go futher south than 1.0442


I am long from 1.0495
I have Buy orders sitting between 1.0442 and 1.0495.

My SL is 1.0395


~huskins

AFAICS, this is just backwash from the carry trade unwinding;, in which Canada is a minor player. Canada is a stock, M&A, and commodities play, not bonds or money-market, w/r to Japan, so once the stock market absorbs the interest rate hike, I would expect $/Cad to continue it's downward trek. The big factor in the longer run is the relative economic strengths/weknesses of the US and Canada, and I think here Canada has the upper hand. With respect to the analysis as presented, for it to be meaningful you have to tabulate it with respect to correspoding measures of activity in the US, and then weight them appropriately (for example, there's no measure of commodities in the analysis, which make up twice as much of Canada's export activity as they do in the US; and as long as Harper doesn't repeat last falls tax changes the M&A activity should continue apace. ).