The USD/CAD pair rose during the session on Friday, breaking well above the candle that we had seen printed on Thursday. We are deftly in a buy only type of attitude in this market, and do recognize the fact that we are more than likely going to see the 1.05 handle tested. The real question the end of their as to whether or not this market can continue higher, which would ultimately bring into play the 1.06 handle, and then above their 1.10 handle.
Remember, the oil markets have a great influence on the Canadian dollar in the do look a little bit suspect that this moment in time. With that being the case, we also have to look at the US economy and the fact that the employment numbers are so weak in America. Remember, the Canadians send 85% of their exports to the United States, so if their biggest customer isn’t working, they are not buying. That of course is an absolute nightmare for their export situation, so this could be the real driving factor as to why we’re seeing weakness in the Canadian dollar.
Going forward, if we can get above the 1.06 handle we think this becomes a long-term trade. However we do not believe that will go straight up. A pullback in this general vicinity would make sense so a supportive candle at 1.04 or so would be enough to have us buying as well. We do think that the move over the last two sessions has been significant enough to warrant buying this pair and we do believe that we should have plenty of opportunities to profit in this pair be in the short term charts, and then ultimately the longer-term charts. It really is going to come down to the 1.06 handle, whether or not this can become a longer-term trade.
This market is known for going sideways for long period of time and suddenly exploding in one direction or the other. We are in the latter of those two phases at the moment.
Written by FX Empire