USD/CAD down nearly 4 cents from its high
The Canadian dollar started last week at an 11-year low but it's recovered nearly 400 pips since. Solid oil prices, better risk appetite and US dollar selling after the soft jobs report have all be drivers.
I like USD/CAD longs here. If the US economy really is slowing it will have negative consequences for Canadian exports and commodity prices. If the Fed stays on the sidelines it means the Bank of Canada will cut.
The short-term factor is oil. In all the latest market enthusiasm, oil hasn't made any great strides. It remains in the recent range and is now pressing against topside resistance. I expect it to turn back lower as US supply increases weigh on prices.
Technically, USD/CAD is now testing minor trendline support from the recent lows. This is the first area of support followed by 1.3000. I'm not in a rush to buy the pair but I think this is an attractive level to begin scaling in.
