The US dollar rallied significantly on Friday in a major “risk off” move. But the US dollar sold off against some currencies due to interest rates falling as traders jumped into the 10-year note. However, the Canadian dollar is also highly correlated to the oil market, which of course got absolutely crushed.
The concern about the South African strain of coronavirus coming out and shutting down economies has played havoc with the oil market in anything risk related. Because of this, the Canadian dollar got absently crushed, as we are closing out the week closer to the 1.28 handle. If we can break above there, then it is likely that the market will continue to go higher, especially if we start to see a lot of concern about whether or not there will be demand for crude oil.
Having said all of that, the fact that we sold off so much in the crude oil market on Friday may actually be bullish in the long run. OPEC has a meeting on December 2 that will determine whether or not they are willing to extend production going forward, or if they are going to sit still. With oil dropping as far as it did, it may make OPEC a bit cautious about expanding production, thereby making it a bullish setup for crude oil in the long run. Granted, that is only speculation at this point, but that is something that you need to keep in the back of your mind. The market has been very choppy until we got to the Friday session, which of course was a blowout. The question now is whether or not we can continue the upward pressure. I think it is probably going to be difficult unless we get some type of really major negative news. As things stand right now, I am currently flat in all of my positions, but it certainly looks as if this pair could threaten to go even higher. The 1.30 level above is the next major target, but obviously we have some noise above that we would have to chew through in order to get bullish in the short term. Pullbacks will probably continue to be buying opportunities.
