Fast forward a week and we have the same bias from the Corporate and Real Money worlds. Everyone wants to buy the USD dip and it increasingly becoming more elusive. Yesterday’s low was 1.3111. I am not saying that the initial USD move was all flow, that mantle goes to the GBP move on the Trade Bill announcement, but once the USD started to trade higher, we became much better buyers of USDCAD. This is significant to me because even as Trudeau said he expected a good result from NAFTA, USDCAD just keep on trucking higher. Bids that were hopeful at 1.3000 now have to rise to 1.3060 at the very least. We have to break 3 major support levels to get a chance to trade at 1.3000 (1.3160, 1.3110 and 1.3060) and that would need some pretty big news from here.
I don’t see many of these issues listed above driving uncertainty going away any time soon, but the North American bias is very clear to me… They need to buy USD’s. This should help to drive USDCAD towards my ultimate target of 1.3550. I ran the idea by a number of people already this morning, and the response was overwhelming: Yes I agree, I like it higher, but want to buy the dip. Everyone wants the dip, no one has it one in enough size. Sounds pretty familiar to me…
The Trade:
Buy USDCAD here at 1.3200, add on a dip towards 1.3160 with a stop at 1.3110 for a move to 1.3550