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USDCAD daily My suspicion for equity trading this month is that it’s been heavily influenced by fund redemptions and tax loss selling. Normally, you would see tax loss selling wrap up by Dec 15 but I believe many sellers were expecting a Powell-inspired rally to sell into. Instead, he was hawkish and that left many tech stock holders stuck selling into a bad market. At the same time, many people saw this coming months ago and have been waiting to buy the tax loss dip. I think we’re finally seeing the buyers outweigh the sellers today and the positive price action adds to the signal. With that, risk assets like CAD and AUD are getting some help alongside stock markets. In addition, a 2.5% rally in crude and a small rebound in natural gas are helping the loonie. At the same time, USD/CAD is only down 13 pips on the day while AUD is up much more. What gives? I think the answer lies in today’s CPI report, which was hotter than anticipated. Normally that would be good for a currency but in the current environment it’s bad. That’s because it could tilt the Bank of Canada towards another […]
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