The USD/CAD pair went back and forth during the session on Friday, hovering above the 1.04 handle as you can see. The candle is a bit on the neutral side, so I think that perhaps support is going to come back into play somewhere in this general vicinity. It would also make sense, as the level has been supportive over the last week or so. Going forward, I think that this probably sets up a range bound market in the short term, with the 1.04 level being on the bottom, and the 1.05 level being on the top.
Below here, you can see that the 1.03 handle will offer support as well, so even if we do break down below the 1.04 handle, we will more than likely see the fall somewhat suppressed. After all, it has been fairly explosive move higher, and there seem to be a lot of uncertainty as far as global growth, which tends to favor the US dollar over the Canadian dollar. On top of that, the oil markets look a bit on the weak side, and that does not bode well for Canada either.
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Nonfarm payroll
The nonfarm payroll numbers coming out later this week will of course affect this pair greatly as it typically does. If the Americans put up a fairly weak jobs number as I anticipate they will, expect this pair to continue to climb simply because the Canadians are far too dependent on America to buy its exports. That of course runs counter to what people would think initially, but if you put some thought into it you recognize the fact that the Americans need to be working in order to be buying Canadian goods. It's almost like having your best customer lose their job that affect your business as well.
On the other hand, if the jobs number is very strong, that it's possible that we could see this market initially surged higher based upon tapering expectations, and then see it slammed lower based upon export expectations as the markets should anticipate a stronger growth environment. However, I think this is very unlikely