The USD/CAD pair fell significantly during the day on Tuesday as the bullish inventory numbers came out of the United States supporting oil markets. By doing so, traders flooded into this market and pushed the value the Canadian dollar higher as they typically do. Ultimately, this is a market that should continue to go lower based upon this, and with that being the case, it’s likely that the uptrend line now that has lifted the market for some time, should now offer quite a bit of resistance. With this being the case, the market should continue to show bearish pressure.
Ultimately, this is a market that has been very volatile lately, and of course reacts to crude oil which of course has seen quite a significant turnaround. At this point in time there are a lot of questions when it comes to supply demand, and at this point it seems that the biggest concern is whether or not there will be as much drilling next year. I do recognize that things will be different in the United States than many other places, so having said that it’s likely that the markets will be very uneven at this point in time. With this being the case, i.e. wonder whether or not we will be able to sustain any longer-term move, so at this point in time you have to be very careful putting all your eggs in one basket.
The market should continue to go back and forth on short-term charts, so you will have to be able to deal with quite a bit of choppiness. Ultimately, this is a market that should continue to attract a lot of attention due to what’s going on in the oil markets but you also have to keep in mind that the 2 economies are fairly intertwined as well. So having said that, expect a lot of noise but it looks like the sellers are starting to take over at least for the short-term as we have rolled over, retested the previous support line, and now has fallen again.