- The US dollar initially rallied against the Canadian dollar on Thursday but has given back some of the strength to sit still and eventually head back towards the unchanged region.
- That makes sense for a multitude of reasons.
- The first one of course being the fact that interest rates did drop in the United States.
But more importantly, on Friday we have both the US and the Canadian employment numbers coming out simultaneously, so why would you have your account overly exposed to that potential jumping around? With this being the case, I'm looking at the USD/CAD market through the prism of one that has a major amount of resistance between here and the 1.40 level.
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Employment Numbers Ahead
And as we have seen such a strong move to the upside, it would make a certain amount of sense at the very least to go sideways here. However, if the employment numbers favor Canada, perhaps they outperform and the Americans underperform, that could send this market right back down.
I think we are stuck in a longer-term range between 1.35 and 1.40, which is not a huge surprise for this pair. There is a lot of necessary exchange that goes on at the border between the United States and Canada, so it does function a little bit like the Euro against the British pound in the sense that so much trade is done that it isn't all speculation and in fact most of it probably truly isn't.
That being said, this is a pair that I think given enough time probably rolls over a little bit. We'll have to see how it behaves at the 200-day EMA, but it's more or less a guessing game heading into the jobs numbers so pay close attention tomorrow morning.
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