Forex Investment and Currency Trading

The CAD has out performed quite significantly over the course of the past week (it is the top performing major currency over the past five trading sessions, just ahead of the AUD and NZD). The view is that USD/CAD retains a heavy bias and the market appears to be gearing up perhaps for a push towards the lower end of the recent trading range at least, with price action this week (and last) suggesting persistent selling interest in the mid/upper 1.24 area. The CAD has largely ignored bad press over the past few days – the renewed slide in oil prices, the first provincial budget deficit in Alberta in 15 years which underlines the broader turn in the commodity cycle, the US imposing (limited) softwood lumber tariffs – and while another large rise in unemployment Thursday would not be very good news at all for the economy, weak data may well be shrugged off again.

Research suggests that while the CAD has tended to sell off in the immediate aftermath of downside employment surprises over the past few months, the weakness is not always sustained for any length of time; The market’s recent failures around the 1.30 zone, the heavy selling from the 1.27 area last week and this week’s struggles in the mid 1.24s suggest that the main risk for USD/CAD in the near term is a test (at least) of important medium term support around 1.2200/60.