Canadian Dollar Forecast to Fall on Crude Oil
USDCAD – Retail traders are now net-short the US Dollar (ticker: USDOLLAR) against the Canadian Dollar for only the third time in 2012, and our contrarian view favors further USDCAD gains through short-term trading.
Yet we hesitate to call for a major Canadian Dollar breakdown as Crude Oil futures prices continue to hold year-to-date lows near the $75.50 mark. Correlations are not written in stone, but Canada remains the largest oil exporter to the United States and we expect the US Dollar/Canadian Dollar exchange rate to track moves in crude oil prices quite closely.
If market fundamentals and sentiment readings are pointing in opposite directions, we often defer to technical forecasts. Our DailyFX Technical Forecast for the USDCAD favors buying weakness.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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