You may recognise the line “got to keep the loonies on the path” from Roger Waters’ excellent lyrics for Brain Damage on Dark Side of the Moon. A still classic album where Roger’s own description of the lyrics, “very Lower Sixth”, sells short the fact that he managed to sum up the human condition in a handful of songs in a way as timeless as Greek and Roman plays where, thousands of years later, you can still recognise the characters as if they were alive today.
However, the Loonies I’m referring to here aren’t the marginalised in society that Roger was referring to, but the Canadian Dollar, which for some reason is called the Loonie. Well the reason is not that Canadians are all wired to the Moon (discuss), but because their one dollar coin is commonly called a loonie. Canadians have a reputation, certainly among Americans, for being very polite. A friend of mine, a musician, got mugged whilst on tour in Canada. I said “I bet they were polite doing it though!” Indeed, the mugger had apparently apologised that he was going to mug him!
Another term in FX which you may not know the origin of is Cable. Not referring to one currency, but to the British Sterling – US Dollar currency pair. It is so called because the first transmissions of the exchange rate between London and New York, back in the 19th century, were sent through the Transatlantic Cable, under the Atlantic Ocean.
Other terms are more obvious, like the Kiwi for the New Zealand Dollar, Swissy for the Swiss Franc and Aussie for the Aussie Dollar.
Meanwhile, FX. The Loonie [USDCAD] is now at a decision point. Sat there, on the weekly chart, on top of the cloud, at the support level before that exhaustion rally, a positive move in either direction seals its fate for now. Down and we could be looking at a fall of 10c to the $1.20 support level. The cloud itself is about 5c wide at this point, and as is often the case, a sideways move falls out of the cloud in time anyway. There is a case for this as, with the US Presidentials, uncertainty could propel the Loonie, and then 5c-10c is a very reasonable fall to expect here. A move up and we’re ambiguous to an extent. A little move up then a fall makes a really attractive H+S here. There are more cases for a correction downwards this year than a big move up. I’m also showing the monthly USDCAD chart, so you can see how the MACD has topped out (this is the signal line indicator at the bottom: I like to separate the signal line and histogram as often they’re easier to read, or more difficult to misread, this way). Another precursor to a fall. Couple that with a little rise to make a right shoulder on the weekly, and we’ve got ourselves putting shorts on for the summer months.
Whatever else you do this weekend though, take a trip down memory lane and pop Dark Side of the Moon on. It remains a classic album of great music, as well as a milestone in recording technique, and I wonder if I’ll ever again buy music that feels as exciting to open and hear as this one did.