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    IronFX Intraday Comment | USD/CAD | 07/01/2016

    • The dollar traded mixed against its G10 counterparts during the European morning Thursday. It was higher against GBP and AUD in that order, while it traded lower against JPY, EUR, SEK and NOK. The greenback remained virtually unchanged vs NZD, CHF and CAD.

    • The Canadian dollar continued its freefall as crude oil prices took another hit. The continued depreciation of the Loonie could ease some pressure from the Bank of Canada (BoC) to cut further its key policy rates at its end of January meeting. The weaker currency smoothens out some of the transitory effects of low oil prices and could support the Canadian economy. With oil being Canada’s major export, not only have the country’s terms of trade deteriorated, but investments in energy-related industries have fallen too as energy companies struggle to remain afloat. The country’s employment report to be released tomorrow could help us to gauge whether the softness in the sector has already materialized or if it will become visible in the coming months. BoC Governor Stephen Poloz is scheduled to speak later in the day, and any hints for further easing could keep the Loonie under selling pressure.

    • Eurozone’s unemployment rate fell to its lowest level since October 2011, exceeding expectations of remaining unchanged and prompting hopes that the job market may be gradually tightening. On the other hand, retail sales fell unexpectedly, for the third straight month. The mixed results had a limited impact on the euro, but the overall outcome could be positive for the Eurozone. The improving job market could create demand-pull inflation and help the ECB to reach its inflation target.

    • USD/CAD traded higher during the European morning Thursday and broke above the resistance (now turned into support) of 1.4100 (S1). The rate printed an almost 13-years high and the short-term bias remains positive. This could trigger further extensions and perhaps challenge our 1.4200 (R1) resistance zone. However, looking at our short-term momentum signs a minor pullback could be looming before the next leg lower. The RSI found resistance just above its 70 level and is pointing down, while the MACD, already above its trigger line, shows signs of topping and could decline a bit. These momentum signs support our view for a minor pullback before the bulls regain control again. As for the broader trend, as long as the pair is trading above the uptrend line taken from the 13th of May, I would see a positive medium-term path as well.

    • Support: 1.4100 (S1), 1.4000 (S2), 1.3920 (S3)

    • Resistance: 1.4200 (R1), 1.4300 (R2), 1.4400 (R3)

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