- The USD/CAD drifted a little bit lower during trading on Thursday and what would have been very quiet trading.
- After all, most of the volume in this pair comes out of North America, unless of course, something is happening in the oil market.
- Remember, the Canadian dollar is thought of as a proxy for crude oil, but that’s not the only thing that moves this pair.
For what it is worth, we have recently tried to break back above the 50-Day EMA but started to fall a bit, and therefore it looks like it is trying to hold as resistance. It’s also worth noting that the market has seen both support and resistance at the 1.35 level, and you can even make a bit of an argument for a “head and shoulders” pattern sitting right on top of that as well. Underneath, the 1.32 level was an area that previously was resistance, so now it should be thought of as support. In fact, we did bounce from that general vicinity just about a week and ½ ago.
Choppiness Ahead
At this point, the market looks like it’s going to remain choppy because we have US dollar weakness in general after the FOMC Meeting Minutes suggested that perhaps there are going to be several members favoring a more gradual rate of interest rate increases. This has people selling off the greenback, but at the same time oil is falling apart, and that works against the Canadian dollar. In this vicinity, you could say that we are trying to form some type of new consolidation area perhaps, but I think that remains to be seen.
Keep in mind that the Friday session will also be very thin in North America, so I would not expect fireworks out of this pair. The real argument will be made on Monday of next week when traders come back to work, and then of course we have the jobs ever coming out at the end of the week in the United States. The final nail in the coffin for the year is going to be the Federal Reserve meeting in December, which is a few weeks away. In the meantime, I would expect a lot of chops in this 300-point range, and then finally we may see some type of decision later.
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