Modest bump for CAD after Nexen deal but more is coming
USD/CAD is slightly lower today but moves have been relatively tame so far.
On Friday, the government approved more than $20B in foreign takeovers. I spoke with Bloomberg about it and this basically sums up my feelings.
“This removes a huge amount of uncertainty in terms of the Canadian dollar and ultimately it sets the stage for medium term Canadian dollar strength through the end of the year, and down through 96” Canadian cents per U.S. dollar, said Adam Button, a currency analyst at Forexlive.com, by phone from Montreal.
The chart adds another reason to be bearish, and that would be even more true if we close below the Nov 7 low today (0.9875).
The recent bounce above parity coincided nicely with the 50% retracement. Other indicators like stocks and copper are also pointing to USD/CAD declines.
The main risk is volatility around the fiscal cliff. Cautious bears might consider using it to establish shorts at better levels.