Ross Woodfield
Blackwell Global Investments Limited
The markets have had a choppy ride over the last week or so and the USDCAD pair has not been spared. It has, however, found respect for the current bullish channel as it rejects off the top of it and may now look to target the bottom.
The fundamental strength in the US at the moment has been driving the US dollar higher against most trading pairs. Unemployment claims have come in below expectations at 289k vs 295k and the FOMC sounding a little more hawking than usual is driving the strength.
When it comes to the CAD, oil prices have a big part to play. Oil makes up 17% of Canadian export receipts with Canada being the 5th largest Crude Oil producer in the world. So it’s inevitable to see the Canadian dollar weakening along with the price of Crude.
On the charts we have seen a number of impulsive waves upwards followed by corrective waves back to the trend line. We have seen a breakthrough of the support at 1.1436 in the most recent wave and a touch of the channel at 1.1669. Look for a corrective wave to follow and a likely target for this will be the support at 1.1436.
Look for the price to find support at 1.1547 and 1.1500 as it makes its way to the firm support at 1.1436. We could see a little bit of ranging at the top, in which case look for resistance at 1.1592 and the top of 1.1669. The Stochastic Oscillator looks to be reversing also. If it breaks lower out of oversold territory we may see some selling orders flow in to help push it lower.
The Canadian dollar is weakening fundamentally against the US dollar. Following technical patterns could lead us to a corrective wave that takes the pair down to the bottom of the channel.
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