Potential In The Breaking Canadian Dollar
Benedetto DiCostanzo | Jul 20, 2015 01:54AM ET
The Canadian Dollar is breaking down and making lows not seen since March of 2009. Weakness in Crude Oil and The Bank of Canada’s surprise rate cut this week has put pressure on the Canadian dollar as it traded through the March 2015 low of 7781 and is approaching the 2009 low of 7653. Weakening economic conditions in Canada caused the Canadian Central Bank to slash its overnight rate by a quarter point and some are predicting more rate cuts in the future if the Canadian economy doesn’t show improvement. This weakness plus the potential for a US rate hike in the fall should keep downward pressure on the Canadian Dollar in my opinion. If the CAD can trade below the March 2009 lows, I see the potential for the CAD to trade down to 7250. I propose buying either 7500 – 7250 put spread for $400 or doing it as a ratio spread by selling an extra 7250 put, paying $200 for the ratio spread.
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