The US dollar initially tried to rally during the week against the Canadian dollar, but the 1.30 level offered quite a bit of resistance. Because of this, the market should continue to be very negative as the area has offered so much in the way of resistance and of course the traders are starting to bet on higher interest rates coming out of Ottawa. The oil markets will work against the value of the Canadian dollar simultaneously, but right now it appears that bond markets are more important. However, I believe that there will be a bit of a reckoning in the oil markets, and that will probably cause a bit of a bounce. The question now is whether we can stay below the 1.30 handle. I think if we do, then the market continues to have more of a downward bias. A daily break above the 1.30 level should be reason enough to send this market towards the 1.32 handle.
Canadian jobs
During the session on Friday, the Canadian employment figures were extraordinarily bullish, and that of course helps the Canadian dollar also. This is just another reason to think that the Bank of Canada will be raising interest rates soon, as traders are starting to favor Canada. This pair does tend to be very choppy overall, so be aware of this, and be willing to deal with the nuances of several moving issues at the same time. We have broken below a weekly uptrend line, so that of course is negative. If we do continue to the downside, my target now is going to be the 1.25 level as it would be the bottom of the uptrend channel that had formed in March 2016. A break to the upside will probably meet a lot of resistance at 1.32 and less oil markets fall apart.
USD/CAD Video 10.7.17
This article was originally posted on FX Empire