To learn more click here
The USD/CAD could rise on Tuesday as the quantitative easing rally that boosted the Canadian Dollar late last week appears to have run out of steam. On Monday, a weaker than expected New York region manufacturing index report pressured the Canadian Dollar because it indicated that the U.S. economy may be weaker than estimated. This could have negative ramifications for the Canadian economy.
On Monday, it was reported that sales of homes in Canada fell 5.8 percent in August. This was the biggest drop in more than two years. On Tuesday, the U.S. will release its NAHB Housing Market Index. A drop in this index could pressure the Canadian Dollar further.
Some analysts are reporting that the unwinding of the record number of long Canadian Dollar positions could have a huge negative impact on the currency. The position may indicate extreme bullishness, but it could also mean the market is saturated with longs and ripe for the start of a sharp break. Speculators should note that a shift in investor sentiment now that the euphoria caused by the stimulus may be wearing off could cause a massive rally in the USD/CAD.