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Forex pairs in this Article » USD/CAD
By: DailyForex.com

The USD CAD pair bounced on Wednesday in order to the back above the 0.98 handle. However, I see that there is quite a bit of noise all the way up to the 0.9950 level, and as such I would be hesitant to buy this pair. Obviously, oil markets will come into play as we trade this market, and as such should be noted that the trend is most decidedly down. I essentially see the 0.9950 level as the "buy signal", while the 0.97 is the "sell signal." In the interim I see nothing but noise, and perhaps trading opportunities for ultra short-term traders. I will take all trades based upon the directional oil, as it seems to be the only thing that is moving this market in one direction or the other. I think that eventually it is going to be easier to continue to fall, and as such that is a trend I would prefer. However, it's obvious that we are in a "risk off" environment from time to time, and this will of course put a bid in for the US dollar. Oil, employment, and the Middle East As stated above, oil markets will come into play. I believe that oil is going higher, and as such the Canadian dollar should benefit. However, until this happens we cannot act upon it. Looking at the employment picture, the United States continues to have roughly an 11% unemployment rate if you include all of the "discouraged workers." On the other hand, Canada added 54,000 jobs last month, which would be equivalent to the Americans adding 540,000 jobs. As the Canadian population is 1/10 of the American one, this really puts an exclamation point on the difference between the two economies. Because of this, I do believe that the Canadian dollar will continue to strengthen over the long run.

The last variable of course is the Middle East. This relates to oil obviously, but we know that there are plenty of flashpoints in that region that could send oil prices higher. Because of that, we may see some headline out of a place like Libya or Iran that pushes oil prices higher, and this of course could drive demand for Canadian crude.

* Please note that due to circumstances beyond our control, this analysis was posted with a delay, but we hope that it will still help some traders understand the market. 

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