USDCAD has been virtually lifeless of late as my ATR indicator posted an almost 15-year low. But the pair may be primed for expanding volatility on the other side of the Fed’s Jackson Hole conference.
USDCAD saw a rather persistent trending move from above 1.0300 to as low as 0.9850 recently, but daily trading ranges (as measured by a 20-day Exponential ATR) have not been this low since the end of 1997 as momentum has run out of steam. Looking at the general complacency levels and the next round of critical event risks starting with tomorrow’s Jackson Hole speech from Bernanke and the fact that this event comes on the last day of the month and the last day of summer, one can’t help but wonder if ever-lower volatility will soon be a thing of the past.
Chart: USDCAD
With a known large event risk up tomorrow and downside momentum waning, it’s no big surprise to see USDCAD consolidating/squeezing ahead of the key Jackson Hole event risk. Next week will decide whether the recent double bottom is confirmed with a move back above parity and then the important 200-day moving average. Parity has been the centre of the USDCAD chart stretching way back into 2010.
John J Hardy,
SAXO BANK