“The loonie is probably a tad overdone -- your risk reward of selling the loonie at these levels is probably not too bad,” Dean Popplewell, head analyst at online currency-trading firm Oanda Corp., said by phone from Toronto. “We’ll probably see some of these Canada cross positions being closed and crosses being taken, and I’d probably feel more comfortable starting to sell the dollar on rallies, and sell some Canada around parity.” Crosses refer to trades with currencies other than the U.S. dollar.
U.S. dollar-Canada dollar was the eighth-most actively traded pair in the over-the-counter foreign-exchange options market today, totaling $470 million of the $15 billion overall. Dollar-loonie options trading was 50% less than the average of the past five Mondays at a similar time in the day. U.S. dollar-yen was the most traded at $6.1 billion.
Data this week is expected to show the economies of the nations using the euro contracted for the sixth consecutive quarter in the three months through March.
The loonie is outperforming this month against all nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index with at 2.5% gain. The Australian dollar has lost 3.6% and the U.S. dollar has added 2.1%.
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