Calgary, Alberta – Trading the Canadian Dollar and the Mexican Peso. 

Coming up to Calgary to trade with my partner for the week.  There was a lot of volatility and some really nice trades available.  Calgary is a boom town that is famous for the Stampede and has a sky line that is populated with skyscrapers from the previous 12 year oil boom. The almost 15 % change in the Canadian dollar is making it seem a little less expensive here.  There are Audi’s everywhere and people spend money consuming expensive dinners and wearing Lulu lemon.  The cost of living is pretty high (compared to southern California), but people make a pretty good living and it seems that the economy is doing well..  Seems

Rolling into 2015 I am watching as the Canadian Dollar is trading at 1.26 to the US dollar. I have been up to see Fort MacMurray and the 10,0000 people oil camps last year with my son.  Last night I met with a group of investor/traders at the Calgary Day Trading Group.  It seems the property bubble is still in tact, that jobs are OK, but some workers from the “Camps” are coming home as collapsing oil prices are causing lay offs at the sands.  I am putting up two charts of the USDCAD and the Mexican Peso.  There are some similarities which you will see almost instantly.

Canadian Dollar trading – the charts show a parabolic move up to what is presently resistance.

Canadian dollar monthly trading chart

and now the Peso.
Neither of these charts are giving a pretty picture for any currency strength in either Canada or Mexico.

What I am seeing in Canada is the convergence of many factors which can fundamentally weigh on the currencies strength and ability to weather this Oil storm.
Technically we could see the Canadian dollar heading to 1.30 then 1.40 over this next 6 to nine months. Unfortunately, it all is reliant on Oil and consumption in Canada. If we look at the chart you can see how the CAD dollar acted at this present price level and that it consolidated at this range for 3-4 months. This would put us into the second quarter.

Weekly Oil trading chart

Oil is the pressure trigger for a stronger Canadian Dollar.

If we see oil recover to a price target of $55 to $60 there will be short term recovery for the Canadian Dollar.  If there is further selling, down to the critical price supports the Saudi Oil ministers said they can support we will see unemployment raise, Oil revenues fall and probably a housing correction under way.   Presently, there is a stall in the housing market as always occurs when you have a harsh winter.  The interesting thing is, that it was 55 degrees outside this week and the sun was bright and shiny.  These two rectangles are showing where price could extend or where it could re trace.  Both of these levels are crucial to the Canadian Dollar but won’t pull it back to the 1.06 level to the dollar experienced in 2014.  Oil would have to soar back to the $70 plus range for strength in the Canadian dollar.