Potential signal:
- On a break above 1.43 AND a lower-than-expected Ivey PMI number, I am buying the USD/CAD with a stop of 1.4250 and a target of 1.4415.
- The US dollar continues to see upward pressure overall, but with the Ivey PMI in Canada and the Canadian employment numbers coming this week, we have a lot of noise.
USD/CAD
The U.S. dollar has shown itself to be positive in the early part of the trading session here on Monday, but it has turned around to drop significantly. I think, really, at this point in time, the market is going to continue to be one that has to watch very closely where interest rates in America go and the idea of what happens with crude oil.
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The Canadian dollar is very sensitive to crude oil, but in this pair it is a little more muted due to the fact that the United States produces so much in the way of crude. That being said, when you look at this chart, we have just pierced an area in the form of 1.4250 that was a significant resistance barrier as well as support.
The market looks as if it is forming a bit of a shooting star
Despite the fact that interest rates in America continue to climb, I think a short-term pullback does make a certain amount of sense, perhaps down to the 1.42 level, maybe even 1.4150.
That being said, if we do break above the 1.43 level, that would be an extraordinarily bullish sign. If the U.S. dollar continues to rally elsewhere, that could be a bit of an effect.
Keep in mind, though, that tomorrow, on Tuesday, we get the Ivey PMI, and on Friday we get Canadian employment. So, it does make a certain amount of sense that over the next couple of days we may be a little skittish to continue to go higher. Maybe Canadian dollar shorts wear off a little bit.
The Ivey PMI is forecast to be 65.2. We will see how that goes, but we are overdone. So, I am leaning more towards a pullback being value, not necessarily a trend change.
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