The USD/CAD pair chopped around quite significantly during the day on Wednesday, as the oil inventory numbers in the United States were bullish as we continue to see demand. However, we also have a bit of a “risk off” situation as the market is currently focusing on the political theater coming out of Washington DC, as President Trump is accused of releasing sensitive information to Russians. However, there is no actual confirmation of this, and therefore the market may have been jumping the gun so to speak. With that being the case, the market looks likely to be very volatile going forward as we continue to see headlines. That has of course worked against the US dollar during the day in general, but the Canadian dollar tends to be very sensitive to risk in America as well, so it would not surprise me at all to see the 1.36 level hold as support.
The importance of the 1.36 handle
The 1.36 level being broken to the upside is a very bullish sign, and that area should now attract a lot of attention. Although we got bullish oil numbers during the day on Wednesday, we seem to be stagnating a bit in reaction. That tells me that the oil markets may perhaps be topping out, and if that’s the case it should work against the Canadian dollar. Also, the Canadian housing market is very difficult now, as we see a certain amount of concern with lenders, somewhat reminiscent of the 2008 situation in the United States. With this being the case, I believe that the longer-term uptrend will continue but it’s going to be very choppy in the end term. If we broke down below the 1.3550 level, then I think we continue to go lower. At that point, I believe that oil will almost certainly have to go higher as well, so look for the correlation between the 2 markets to influence trading.
Written by FX Empire