The USD/CAD pair fell significantly during the course of the session on Thursday, testing the 1.40 level for support. We did in fact find it, and at FX Empire we have been waiting for this move. The fact that we are starting to show signs of support all the way down to the 1.38 level, we are buyers on a break above the top of the hammer as is market should continue to go much higher. After all, you have the longer-term uptrend in this marketplace, and of course oil simply cannot get out of its own way at this point in time. Obviously, the Canadian dollar is highly sensitive to the price of oil, and as long as the oil markets are soft, the Canadian dollar will be soft as well.
We believe that this market is going to try to reach to the 1.43 level, and then eventually the 1.45 level. Quite frankly, we think this is a longer-term market, and there are a lot of big-money players in this market on more of a “buy-and-hold” type of scenario. We have no interest in selling until we break down well below the 1.38 handle, something that does not look likely to happen at this point. If we did do that, that would be a pretty significant slap in the face for the buyers, and could probably send this market down to the 1.35 level in a flash.
The Canadians have slashed their growth forecast for the next couple of years, so that of course works against the value of the Canadian dollar as well. Ultimately, we believe that every time this market pulls back there will be people looking for value, and start buying at that point. That’s essentially what we are doing right now, and given enough time we think that every time we pullback we will see a “higher high”, which of course is the very essence of a longer-term uptrend. Until oil strengthens, this market should continue to see more of the same as the us dollar is also considered to be the “safety currency” that most traders run to.