- The US dollar rallied a bit in the early hours here on Tuesday against the Canadian dollar as we are in the midst of breaking out a pretty significant resistance.
- I think at this point in time, we start to see more of a buy on the dip attitude. And that's exactly how I would play this market. Full disclosure, I'm already long.
But what I find interesting is that we are getting ready to get the so-called golden cross when the 50 day EMA crosses above the 200 day EMA. And of course we are well above the 1.40 level, at least as I record this, and that does free the market to perhaps go looking to the 1.4250 level before it's all said and done. The Canadian economy is struggling in this current environment, and it does make a certain amount of sense that the US dollar outperforms a Canadian dollar because of that.
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Ultimately, this is a scenario where we will continue to see a lot of questions out there about the global economy, which of course helps the US dollar and hurts a commodity currency like the Canadian dollar. Furthermore, these two countries continue to have a trade spat going on, which heavily damages the Canadian economy as 25 % of its exports end up in the United States.
That being said, word of caution, most of the goods that are coming into America from Canada are actually already under an agreement. So really what we've got is a situation where there's a lot more noise than reality, but still, Canada is going to come out on the short end of the stick here. All things being equal, this is a market that I think continues to be noisy, but I also think it continues to be one that you're looking for value to take advantage of because we have just broken out of a massive rounding pattern that has been in effect really since April of this year.
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