USDCAD continues to head north and is trading inside an ascending channel on its 1-hour time frame. This channel has held since the start of September and another test of support is underway.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 50% level lines up with support around the 1.2500 major psychological level. This lines up with the 100 SMA dynamic support and a former resistance level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the uptrend is more likely to continue than to reverse. The 200 SMA is also slightly below the channel support, adding an extra layer of defense to the downside. Stochastic is in the oversold region, which suggests that selling pressure is exhausted and that buyers could take over soon.
Jobs data from both the US and Canada turned out weaker than expected on Friday, with the former shedding 33K jobs and the latter gaining 10K versus the estimated 13.9K increase. However, the US dollar was able to benefit from a stronger than expected 0.5% increase in average earnings and expectations of a positive revision in the September figure later on.
Also in Canada, the Ivey PMI rose from 56.3 to 59.3 to reflect a faster pace of industry growth compared to the estimated drop to 56.0. US and Canadian banks are closed in observance of Columbus Day today so liquidity could be lower than usual.
There’s not much in the way of top-tier data from Canada this week while the US has plenty of catalysts on deck. This includes the release of the FOMC minutes, retail sales, PPI, and CPI readings. The oil-related Loonie might simply take its cues from the commodity this week.
By Kate Curtis from Trader’s Way