USD/CAD fell during the session on Monday again, pushing towards the parity level as the bearish momentum continues to impress. However, it has to be said that the parity level is just below, and it of course will be somewhat supportive as the level has a large psychological significance in the market.
The oil markets of course are going to push the Canadian dollar around as well, and it should be said that the oil markets did exactly look impressive on Monday. The candle is very weak looking, and in fact was a very small shooting star. If the oil markets fall, it's hard to believe that the Canadian dollar will continue to gain. If that's the case, we could see the beginning of a bit of a bounce.
Non-farm payrolls
Most people don't pay attention to this, but this pair is one of the most highly influenced by the nonfarm payroll number that is coming out on Friday. It is because of this that I believe we could very well set relatively still in the parity range. This pair tends to frustrate a lot of people because of the highly correlated economies and what they do to these currencies. The fact is that the Canadians send well over 85% of their exports to the United States, and as such an American economy that is weak is actually poor for the Canadian dollar. It is a bit counterintuitive at first, but when you think about the fact that the Americans are by far Canada's biggest customer, it makes sense that if they have no jobs - it has a detrimental effect on the Canadian economy.
Looking at this chart, I think there is a significant support level at the parity mark, and it is because of that I believe this market could be fairly quiet. However, if we manage to get below the 0.9950 level, I would be more than willing to place a short position in order to make an attempt on the 0.97 handle. It is down there that I see the next major support area. I should also state that on a supportive candle in this particular area I would be willing to go ahead and have a shot at a potential long as well.