Our corporate currency specialist, Ashish Advani, shared some views on the Canadian dollar Friday which I thought were very interesting. It seems a pattern has emerged in the trading of the loonie vs. the US$:
Between Sep.26, '06 and Oct. 17, '06 USD/CAD rallied from 1.1087 to 1.1419 (332 bps, 14 trading days)
The Pullback - 240 bps to 1.1179 on Oct. 27, '06 (8 trading days).
Between Oct. 27, '06 and Nov. 21, '06 USD/CAD rallied from 1.1179 to 1.1496 (317 bps, 17 trading days).
The Pullback - 209 bps to 1.1287 on Nov. 28 '06 (6 trading days).
And the most recent up leg..
Between Nov. 28, '06 and today, USD/CAD rallied from 1.1287 to 1.1580 (293 bps so far and 12 trading days).
Another day or 2 of topside pressure and 24-39 bps would put USD/CAD around 1.1604/19 which is almost exactly the top of 6 month old ascending price channel. It would also match the previous 2 up legs in both magnitude and duration (and time of month for that matter). SHOULD the pattern repeat itself, we could see a 200-250 bps pullback to unfold sometime over the next week and possibly over the illiquid holiday week after that. Target would be ~1.1350 which is where the daily support line that connects the pullback lows mentioned above comes in. Good news for the CAD$.
News 
Market Data 
Discover 
