The Canadian dollar fluctuated against the US dollar on Friday as we continue to see plenty of strength in the crude oil market. The Canadian dollar is a major beneficiary of this situation, but at the end of the day we ended up having a bit of a neutral candlestick forming. The neutral candlestick sits just below the 1.24 handle, showing signs of selling pressure just above. That being said, the market also has quite a bit of interest at the 1.25 handle, which will attract a lot of attention.
We started to see a lot of commodity currencies give up a little bit of strength heading into the weekend, which suggests that perhaps we are ready for a little bit of a pullback in these commodity currencies. Crude oil has even pulled back just a bit, but at this point I am not sure whether or not we are simply looking at the possibility of short covering, as well as closing out long crude oil positions.
If we were to turn around and break above the 1.25 handle, then it is likely that the market could go looking towards the 1.26 level. Breaking above that opens up a move much higher but that seems to be very unlikely at this point. The US dollar is getting hammered against quite a few currencies, especially the commodity variety such as the Canadian dollar, Australian dollar, New Zealand dollar, and Norwegian krone. Ultimately, the British pound has rallied a bit but is still struggling just below resistance, and the euro looks very sick indeed. In other words, I do think that we are going to see a bit of choppy behavior for the first couple of trading sessions this week. Nonetheless, I think this is a market that will have to see a little bit of a bounce in order to pick up further downward momentum.
