Business-Insider

There is a correlation between a currency's appreciation or devaluation and the economy's trade numbers. Economists describe that as the J-curve. One of the things it describes is that trade will lag the currency adjustment but it will eventually catch up. The CAD had the worst net trade numbers in the last 9 years in December. Following that release, this morning, the USD/CAD.... just sat there.

Is the movement already priced in? I don't know but I am using this info to set my bias in the near term. As traders feel their way through the data will we see a shift towards a devaluation? If trade continues in its recent trend, that is what the inverted J-curve would predict. That bias may create higher probability trades in the near term to the upside.

In the very short term that means I am looking for bounces off support on the USD/CAD for some speculative opportunities. One of those likely support levels is shown on the chart below.

To see more analysis of support and resistance on the USD/CAD, click here: www.pfxglobal.com


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