The S&P 500 is now down just a measly 3 points to 1652 and that’s underpinning the continued decline in USD/CAD. If stocks go green, look for a bigger move.
Overnight, USD/CAD made three attempts to break 1.04 and couldn’t do it. It’s been an essentially straight-line move from parity two weeks ago so some consolidation and retracement is normal.
Ultimately, I think USD/CAD goes higher. I spoke with Reuters early today on the Canadian dollar as I was getting to my desk.
“The Canadian dollar is caught in a nasty move in global markets,” said Adam Button, currency analyst at ForexLive in Montreal. He said correlations between asset classes had broken down and investors were struggling to guess where markets go from here. “It’s walking on a razor’s edge right now. It’s 24 hours of fright, after three months of exuberance,” said Adam Button, currency analyst at ForexLive in Montreal. “It could prove to be a turning point, or a blip. At this point, I lean more towards a turning point, and continued Canadian dollar weakness.”
I’m still struggling with the question of turning point or blip, but given the rebound in US stocks, I’m now leaning toward blip but today is the first chapter in a long story.
