(This is an excerpt from an article I originally published on Seeking Alpha on Feb 2, 2015. Click here to read the entire piece.)
It is never good to see a negative print on a GDP growth number. It is even worse when it is below market “expectations.”
When Statistics Canada reported a GDP decline of 0.2% from October to November, the print came in below expectations for a flat report. What I am sure stuck out the most was the negative performance of mining and oil and gas extraction.
Source: Statistics Canada
It looks like the long-feared economic decline of Canada’s oil patch has begun.
{snip}
The reaction in currency markets was dramatic and underlined the fresh fear that the Canadian dollar’s weakness still has plenty of room to run. For the third day in a row, the Canadian dollar lost significant ground to the U.S. dollar. The monthly chart below shows that CurrencyShares Canadian Dollar ETF (FXC) has almost returned to 2009 levels.
Source: FreeStockCharts.com
Normally, this kind of retest would get me interested in trying a buy. In THIS case, I am lot more cautious. The downward trend in the Canadian dollar has lasted longer and extended further than even my most bearish assessments from 2013 to 2014. {snip}
Be careful out there!
Full disclosure: long USD/CAD
(This is an excerpt from an article I originally published on Seeking Alpha on Feb 2, 2015. Click here to read the entire piece.)