Technical data of the currency pair:
Previous closing: 1.3782;
Daily range: 1.3720-1.3798;
52-week range: 1.1916-1.4692;
Annual revenue: 10.83%;
Change in % for the previous day: -1.84;
- In November 2015 Canadian economy has resumed growth, causing the rise in demand for the national currency.
- Yesterday positive ADP data on non-farm payroll became known. Nevertheless, the CAD managed to strengthen positions against the USD;
- The CAD is a commodity currency. Canada takes the leading position in the world oil exports. Exchange rate of the Canadian currency strongly depends on the oil prices. The rise in the CAD versus the USD is possible in case of the price adjustment in the commodity market, which may take place after the current long-term decline;
- The data from “Commitments of Traders” show that over 60% of the large speculators predict that the CAD will grow against the USD. Long positions have increased up to 119537 contracts. The number of open short positions amounts to 33931 contracts;
- This week we expect publication of the important US economic data, which can have strong impact on the currency exchange rate. On Friday, 5 February non-farm payrolls will be released.
- Since mid-January the Canadian dollar has strengthened its positions (over 900 points). Market shows weak reaction to the positive US data. Possible adjustment in the commodity market will trigger the rise in the CAD. The data from “COT” indicates that large speculators believe in the power of the Canadian currency.
- Therefore, in the near future the Canadian dollar can grow against the USD and short positions will be preferable.
Trading tips for the currency pair USD/CAD
Long-term trading: the data on non-farm payrolls, which will be released on Friday, 5 February, is unlikely to have a strong impact on the CAD. Currently we recommend to refrain from opening long-term trades on the pair USD/CAD. It is better to enter the market after the publication of the statistics on Friday and after retesting the key levels of support and resistance and respective confirmations (for example, a pattern Price Action).
Medium-term trading: yesterday, the CAD has managed to break down and consolidate below support levels of 1.4000 and 1.3815. After retesting these levels and the formation of the reversal patterns on the smaller timeframes (for example, “lower high”, “short squeeze”), we recommend to open short positions. Risk per trade is not more than 1.5% of the capital. Stop-order can be placed slightly above the signal. Take profit should be placed at the levels of 1.3750, 1.3650 and 1.3525.