The USD/CAD pair rose in reaction to the nonfarm payroll numbers coming out on Friday, which generally favors the US dollar when employment numbers look good. This was mainly because of the Federal Reserve and its implied tapering off of quantitative easing due to better employment, which of course will drive up yields in America.
Oil markets continue to struggle as well though, and this of course works against the value the Canadian dollar. This market is very sensitive to the price of oil which seems to be in a bit of a free fall at the moment. Nonetheless, I believe that this market is just starting to pick up steam, even though the candle for the Friday session was a little bit of a shooting star, I think that is a sign that were going to pull back, not necessarily fall apart.
Watch the oil markets as well.
Watch the oil markets as well. This is because the oil markets have been following, and this of course is going work against the value of the Loonie. This is the longer-term correlation that we see over and over in the markets, and because of that I believe that this market would prove to be positive, but understand the fact that the market will be choppy as it tends to be historically as well. Because of this, you have to be very patient when trading the USD/CAD pair, but recognize the fact that sudden moves are common in this pair.
If we can get above the 1.05 level, I believe that we had to the 1.06 handle. Above the 1.06 handle though is when things get truly interesting as far as I can tell. I believe that there is a bit of "air pocket" in this currency pair, heading all the way to the 1.10 handle over the longer term. As far as shorting is concerned, I am very hesitant to do so simply because I see no catalyst at this point in time, especially considering that the US dollar itself should continue to appreciate in general.
