The Canadian Dollar and the NAFTA

Digital Derivatives MarketsForex, Trade Alerts


The Canadian Dollar (CAD) was sold in today’s session against a basket of currencies in tandem with crude oil. We are aware President Trump threatened to terminate the NAFTA but our assumption is that CAD recent weakness is linked to the selling in crude oil.

CAD weakness may have provided several entries in the market but we would first like to discuss the current market conditions. Both the Fed and ECB refused to provide any details to future monetary policies. It has already been reported several months ago the ECB may alter its monetary policy in December.

There were several speculations the deposit rate may be hiked ahead of December but tapering the QE may only be announced at the end of the year. The Fed tied its next rate hike to inflation figures (CPI), which have came in below market expectations. This has created doubts for future rate hikes by the Fed by the end 2017.

As a result of the above we are noting a fairly tight price range across a basket of currencies. The range favors short-term strategies as well as scalping. We are not targeting 40 – 60 pips in our strategies, to withstand these conditions we can employ the weekly or monthly chart while loosening the protective stops or to remain on hold and observe.

In today’s session we have noted gold and silver broker outside their price range, which is an encouraging sign. It may still take several days (until the monthly close) until we see a significant change in the current market conditions. We are not keen on widening the stops, which is why we decided to remain on hold.

We have noted a potential entry in NZDJPY (long) but we decided to dismiss the entry. We suspect NZD may correct higher but we will wait for the monthly close. NZDCAD however may have provided us with an entry. We have avoided NZDCAD since 2014 as we tend to prefer other crosses but the entry appears to be firm.

Although the trigger for NZDCAD recent gains was due to a weak CAD we cannot invalidate the possibility we may note a firm NZD within the next couple of weeks.

NZDCAD Daily Chart

Please click on the chart to enlarge:

The Canadian Dollar and the NAFTA

NZDCAD Daily Chart 28/08/17

This is a classic long entry where we can use a buy limit order. On most occasions we do not layer an entry order as we would rather initiate the trade at market price.

NZDCAD Entry Order

NZDCAD long at 0.9030 (buy limit)
Take profit: 0.9185
Protective stop: 0.8974
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 7 days

Note: The market has 24 hours to trigger the buy limit order. Should NZDCAD retrace lower but fail to trigger the buy limit order we may initiate the trade at market price in tomorrow’s session.

29/08/17 UPDATE: NZDCAD triggered the buy limit order is trading at 0.9095 at the time of this writing.

Please click on the chart to enlarge:

The Canadian Dollar and the NAFTA

NZDCAD Daily Chart 29/08/17

We are closing 30% of the long trade at market price.

30/08/17 UPDATE: We are shifting NZDCAD protective stop to 0.9043.

31/08/17 UPDATE: NZDCAD triggered the protective stop at 0.9043, we are not re-entering the market.


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The Canadian Dollar and the NAFTA

The Canadian Dollar and the NAFTA

Last Updated on October 2, 2017