The Canadian Dollar has had a roller coaster ride due to oil, after Saudi Arabia comments and leaks from NAFTA negotiations. A lot of confusion arose from the information that as a result of a diplomatic dispute between Canada and Saudi Arabia (Prime Minister Trudeau criticized the arrest of a Saudi activist), Riyad ordered the central bank and the national funds to sell Canadian assets. The amount coming into play is not big and should not have a clear impact on CAD, but the information has become an excuse for the movement fueled by a sell-off of crude oil. However, as the CAD market is unstable, it showed a dynamic retreat to the USD/CAD decline after reports that the US and Mexico have agreed on the trade of cars, which opens the way for further negotiations of the NAFTA agreement. Nevertheless, it does not look like the “Saudi factor” would be sustained for longer, and expectations for NAFTA (and the implications for tightening the BoC policy) in the longer horizon should play a greater role.
Today, the global investor’s attention should be focused on another set of Canadain economy data in form of Unemployment Rate, Employment Change, Part-Time Employment Change and Participation Rate.
Let’s now take a look at the USD/CAD technical picture at the H4 time frame. The market has tested the 50% Fibo retracement level and hit the technical resistance at the level of 1.3111 before the drop. Currently, the bulls are again trying to rally higher and the same level should be in play. In a case of a breakout higher, the next target for bulls is located at 61% Fibo at 1.3164. On the other hand, the immediate support is seen at the level of 1.3000. Please notice the positive momentum that supports the short-term bullish bias.
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