The USD/CAD pair fell initially during the session on Friday, but as you can see formed a hammer. With the US employment numbers coming out a bit on the light side, we did of course see this market show some weakness. However, we ultimately saw the market turned back around by the fact that the Canadian numbers were actually negative. With that, we believe that ultimately the pair will break out to the upside. It is obviously supported just below, and with the uptrend line below it’s very likely that we continue to see buying pressure.
On top of that, the oil markets certainly are doing no favors for the Canadian dollar, so the end of the day we believe that ultimately this market will break out. The 1.10 level is massively resistive though, so it’s very likely that is going to take some time to break out. Once we do, we could go as high as 1.12, and then ultimately 1.15, but that of course is a longer-term target. As far selling is concerned, we don’t have any interest in doing so, but if we broke down below the uptrend line from the last couple of years, we would then have to seriously consider changing this market and the bias that we trade it in.
The fact that we have formed two hammers in a row of course suggests quite a bit of support as well, and as a result we feel that this market should ultimately find buyers willing to step in and take a shot. The US dollar will be favored overall, and even though the jobs number was fairly weak during the Friday session, the reality is that a lot of people feel him numbers were quite right. After all, most economic announcements coming out of the United States have been rather strong, so to suddenly think that the economy is going to flip around that quickly is probably a bit much. With that, we fully anticipate seeing the US dollar gain in value given enough time, and as a result we are bullish.