The short exposure levels are raising with the hedge funds on the Canadian Dollar, but now we have an upward turn of the net short / open interest ratio, that testifies at least an ongoing base from the sentiment point of view. It will be very difficult to be more pessimistic than this. Instead, we can wait for a technical reversal sign but certainly there not to many changes of a new rise for UsdCad and therefore, it may be worthwhile to start to evaluate the CAD as an alternative to the U.S. dollar for a possible portfolio diversification.
As mentioned, however, the technical reversal signals are still missing. In this regard it will be interesting to see what will happen to UsdCad between 1.1225, February top and 1.1335, 50% retracement of the entire bear market. A new test with no positive outcome would be a positive signal to come back bullish in the short-term on the Loonie, but only under 1.09 the investment will have a strategic value in the medium term. As for EurCad, the level to be monitored will be 1.49, below that threshold the doors to 1.41/1.42 would be open (Chart source: Bloomberg)
As mentioned, however, the technical reversal signals are still missing. In this regard it will be interesting to see what will happen to UsdCad between 1.1225, February top and 1.1335, 50% retracement of the entire bear market. A new test with no positive outcome would be a positive signal to come back bullish in the short-term on the Loonie, but only under 1.09 the investment will have a strategic value in the medium term. As for EurCad, the level to be monitored will be 1.49, below that threshold the doors to 1.41/1.42 would be open (Chart source: Bloomberg)
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