Focus on USD/CAD

The Canadian dollar remains one of the key currencies to watch at the moment particularly given the volatility we’ve been seeing in oil prices.

Canadian Dollar
Source: Bloomberg

Oil is a key ingredient for Canada’s economy and with prices continuing to slip, the impact could be devastating. In fact, the Bank of Canada Governor Stephen Poloz was on the wires this week saying the falling oil prices would have an ‘atrocious’ effect on the economy. In the absence of geopolitical risk, it seems there could be further downside for oil and in turn the CAD. Having said that, USD/CAD is an interesting pair to watch at the moment. The USD has been in fine form this week and heading into the non-farm payrolls reading, I feel traders will be looking to buy the dips in the greenback. Traders could look to buy USD/CAD on dips into 1.2600 with stops placed below 1.2500. Potential targets will be to 1.2800 which is where recent highs lie and there is a possibility we’ll see it nudge through that level.

 

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