Canadian Dollar Finds Support As Employment Data Raises Yeild Outlook
Risk appetite surprisingly remained firm throughout the week which forced us to take a loss on a short NZDUSD trade. A break above the 50-Day SMA was the catalyst for abandoning the position. Last week I warned that of markets start to become uncorrelated then we could see commodity dollars start to find support as their economies have outperformed. We may be seeing that today with the Euro and Pound under pressure with the “loonie” Aussie and Kiwi holding firm or appreciating in the Canadian dollar’s case. Indeed, a robust Canadian employment report will raise the outlook for a rate hike from the BoC which could lead to continued “loonie” support unless we see oil prices tumble on a broad based flight to safety. However, if you aren’t already short the pair I would wait for a break below the 100 Day SMA at 1.0303 with 1.0138-6/21 low as a target. Conversely, if we start to see risk aversion gain momentum then the pair could sharply reverse.
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