Lucked out so far with my USD/CAD idea, but with big events ahead for both currencies, I thought it might be time to reduce my risk. Here’s a quick adjustment.
Since entering short USD/CAD at 1.2500 a couple of weeks ago, the Greenback continued its slide lower (recently on bearish comments from U.S. Treasury Secretary Steven Mnuchin), pretty much being the biggest driver of helping my short position along the way.
The pair hit a low of around 1.2282 today, but has since bounced after a sudden USD rally, likely due to Trump’s comments on the U.S. dollar during an interview with CNBC today. We’ve also got reports from the NAFTA talks that the U.S. “has not moved an inch”, and if those talks don’t end up going well, that could hurt the Loonie more than the Greenback. This is a fluid situation so I’ll definitely have to keep a close eye on that as well.
The downside momentum may have run out of steam for now and with a slew of top tier events from both U.S. and Canada coming up Friday and next week on the economic calendar, I think it’s time to reduce my risk on this trade in case events like Canada’s CPI report tomorrow or next week’s FOMC Statement do not go my way.
With that in mind, I decided to roll my stop down from 1.2875 to my entry level at 1.2500 to create a near risk-free trade.
I’m still keeping my initial target at 1.2075, and if the pattern of lower ‘highs’ does hold and momentum to the downside picks up again, I’ll definitely look at adjusting once again by adding to my position if the pair can break below the 1.2300 handle again. If that happens or if the NAFTA talks go south, I’ll definitely do an update so stay tuned! And until then, good luck and good trading!