The USD/CAD pair fell apart during the session on Tuesday again, reacting to comments coming out of Bank of Canada member Carolyn Wilkins, suggesting that perhaps the Canadian central bank will have to taper off a quantitative easing, or even look at tightening further in the future as the economy seems to diversify away from petroleum. I think that the move is a little premature, but it does look as if the BOC is starting to think about ending the easing cycle. This of course is good for the Canadian dollar, but ultimately oil will influence the Loonie, and that will continue to be a drag overall.
I believe that this could be a buying opportunity given enough time, but I’m not willing to step into the market right now. I believe that waiting for supportive candle would be a nice opportunity, on the daily chart. Pay attention to the crude oil markets, they certainly will have their say when it comes to the CAD, but this also could be affected by the Federal Reserve meeting today. If the Federal Reserve looks likely to continue to raise interest rates, that will send this market right back around and straight to the upside. The Canadian dollar, although influenced by several things, is still mainly a petroleum-based currency, and it will be a long time before that changes. I believe that the market is still in a cyclical uptrend, and even though this has been a brutal selloff, those with deep pockets are probably looking to pick up US dollars “on the cheap.” Start out small, and then add to your position as it goes in your favor. However, I do recognize that it may take a few days to get a nice opportunity.
Written by FX Empire