Traditionally, the Canadian dollar has its strongest period of seasonal strength in the year from the beginning of April to the end of May.
A major factor for that strength is a seasonal increase in exports of autos and commodities including grains, fertilizer, coal, base metals and crude oil. During the past 20 periods, the Canuck buck has gained an average of 2.0 per cent relative to the U.S. dollar from the beginning of April to the end of May.
This year, the demand and export of autos and a wide variety of Canadian commodities is increasing. On the charts, the Canadian dollar has established an intermediate uptrend and appears poised to move above resistance at 101.62 U.S. cents. Support is at 99.56 U.S. cents and the next technical target on a break above 101.62 cents is 103.72 U.S. cents.
Another reason for strength in the Canadian dollar in early spring is weakness in the U.S. dollar Index. During the past 20 periods, the U.S. dollar Index has declined an average of 1.5 per cent per period.
Investors can invest in currencies through a variety of investment vehicles including futures, forwards and exchange traded funds (ETFs). U.S. exchanges list 17 ETFs and the Toronto Exchange lists three currency ETFs.
The most actively traded currency ETF is PowerShares DB US Dollar Bullish Fund . The second most active is CurrencyShares Australian Dollar Trust , while the third most actively traded currency ETF is CurrencyShares Canadian Dollar Trust .
Other single currency ETFs include CurrencyShares Swiss Franc Trust , WisdomTree Dreyfus Chinese Yuan Fund , CurrencyShares Japanese Yen Trust , CurrencyShares Euro Trust , CurrencyShares British Pound Sterling Trust , WisdomTree Dreyfus Brazillian Real Trust and CurrencyShares Swedish Krona Fund .
Canadian ETFs include Horizons US Dollar Currency ETF and Horizons Australian Dollar Currency ETF . Horizons also offers the US Dollar Currency ETF in U.S. Dollars .
Don Vialoux is the author of free daily reports on equity markets, sectors, commodities and Exchange Traded Funds. Daily reports are available here at http://www.timingthemarket.ca/. He is also a research analyst for Horizons Investment Management Inc. All of the views expressed herein are his personal views although they may be reflected in positions or transactions in the various client portfolios managed by Horizons Investment Management.
- PowerShares DB US Dollar Index Bullish Fund$24.270.00(0.00%)
- Guggenheim CurrencyShares Australian Dollar Trust$76.320.00(0.00%)
- Guggenheim CurrencyShares Canadian Dollar Trust$78.950.00(0.00%)
- Guggenheim CurrencyShares Swiss Franc Trust$99.540.00(0.00%)
- WisdomTree Dreyfus Chinese Yuan Fund$24.960.00(0.00%)
- Guggenheim CurrencyShares Japanese Yen Trust$89.590.00(0.00%)
- Guggenheim CurrencyShares Euro Trust$110.870.00(0.00%)
- Guggenheim CurrencyShares British Pound Strlng Tr$142.930.00(0.00%)
- WisdomTree Brazilian Real Strategy Fund$15.030.00(0.00%)
- Guggenheim CurrencyShares Swedish Krona Trust$121.250.00(0.00%)
- Horizons US Dollar Currency ETF$12.490.00(0.00%)
- Updated April 28 3:43 PM -4GMT. Delayed by at least 15 minutes.