The USD/CAD pair is a proxy for most people to play the oil markets. The Light Sweet Crude markets have absolutely crumbled, and as a result the Canadian dollar has suddenly found itself out of favor. The poor Non-Farm Payroll numbers on Friday will also work against the outlook for the Canadian dollar as the Canadians send over 80% of their exports into the United States. With the Americans failing to employ large sections of their workforce, there are going to be fewer customers for Canadian goods.
The Canadians themselves aren’t hurting yet. But if the US goes back into a recession, or even just slows down, this will certainly cause a slowdown in Canada. It is a problem with export economies, as they are dependent on others to buy their goods. In the situation that we have around the world at the moment, it is difficult to be confident in export economies as global trade appears to be slowing down.
The recent action in this pair has been decidedly bullish, and it looks as if this could continue. After all, there is very little out there to suggest that the economies around the world are about to suddenly accelerate, so this pair sets up as a one-way trade in some aspects.
1.05
The next target for the bulls in this pair is 1.05 in my opinion. The recent breaking of the 1.03 resistance level sets this up, and at the moment we are just above 1.04 as the action was bullish again on Friday. The pair has been a bit parabolic at this point, so a pullback would be very welcome for a chance to go long. However, this pair is known to go parabolic and then grind sideways for long stretches of time, so we may not get our chance to buy at a cheaper price.
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The pair has support at the 1.03 level, 1.02, and even the 1.01 to parity area. In this situation, it looks to me that buying is the only way to go at the moment. If the Light Sweet Crude market manages to break below $80 – this pair will skyrocket.