Chart of the Day – Commodity Currencies Break Down, $FXC, $FXA

by Enis December 4, 2013 1:19 pm • Commentary

We highlighted the commodity currencies back in April and May, when we had a couple nice trades on FXA and FXC.  After big moves lower in the first half of 2013, the Aussie dollar and the Canadian dollar have both been flat for much of the past 5 months.

However, both have resumed their weakness in the past couple weeks.  The Canadian Dollar is hitting its lowest level vs. the U.S. Dollar in more than 3 years:

USD/CAD weekly, Courtesy of Bloomberg
USD/CAD weekly, Courtesy of Bloomberg

The AUD/USD made a new multi-year low on its summer swoon earlier this year, but it’s only about 1% away from breaking those lows:

AUD/USD weekly chart, Courtesy of Bloomberg
AUD/USD weekly chart, Courtesy of Bloomberg

While the FXC and FXA trades were nice wins earlier this year, the currency pairs look a bit too extended for a good entry here.  We have our eyes on these pairs not just for trades on the crosses, but as a decent tell for overall risk appetite.  Back in the spring, the Aussie and Canadian dollar fell before stocks finally got a taste of the jitters.  The setup is looking similar this time around.