Head Fake or Stars Aligning: Canadian Dollar Sinks

The Canadian dollar broke to a new 10-year low today and there's a modicum of support here before it probably heads to the 15-year lows. Impetus for the latest move: Negative interest rates an option in Canada, Stephen Poloz says
"We now believe that the effective lower bound for Canada's policy rate is around minus 0.5 per cent, but it could be a little higher or lower," Poloz said.
The Canadian dollar is a significant component of the U.S. Dollar Index at 9.1% of assets, but if the Canadian dollar were to fall another 10% to 15% it would only translate into a small ~1% move in the U.S. Dollar Index. The Canadian dollar isn't suffering from isolated problems and odds are the Australian dollar will catch up sooner or later. The key currencies for U.S. Dollar Index are the euro and yen and they are substantially similar to the Canadian dollar chart as well, though not as tight as AUD.

Here's the chart that most clearly shows why I'm not more confident in the next move for the U.S. dollar. That is a nice head-and-shoulders forming in USDSEK.

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