Canadian Dollar dips below 76 cents US as Loonie follows oil down, down, down…

Retail forex brokers have seen a large rise in the trading of the Canadian Dollar the past few weeks, mainly the USDCAD pair, as the ‘Loonie’ continues to be one of the most volatile currencies of 2015. And mostly to the downside.

The Canadian Dollar hit (another) multi year low on Tuesday, dropping below 76 cents US for the first time in more than 10 years. The Loonie last had a 75 cent handle in 2004. As of the time of writing the USDCAD pair was at 1.3190, meaning a value of just 75.82 cents US for the beleaguered currency.

Most currency heat maps (e.g. below, courtesy of show the USDCAD as one of the most traded pairs in recent days, with most of the trader sentiment continuing to be negative. The Loonie’s dive has followed the fall in crude oil prices in recent months.

currency heat map USDCAD

The question in many traders’ (and brokers’) minds is: How low can you go? And, is now the time to buy?

USDCAD 2004 to present

USDCAD chart 2004 to present. Source: Google Finance.

Based on the heat map analysis, it looks like it is not the right time just yet to try to grab the falling knife. Especially with many analysts calling for $30-something oil looming.

However Canada’s economy is more than just crude oil and commodities. And with a just-announced Canadian federal election on the horizon (for October 19), which often comes alongside promises of spending and economic stimulus no matter who is elected, the date for USDCAD bottom fishing might not be far away.

One thing is sure, however – the coming days and weeks will see a lot of volatility in Canadian pair trading.

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