The US dollar found buyers at the crucial 1.3550 level against the Loonie on Friday, as traders continue to play the range in this pair.
USD/CAD
The US dollar has shown itself to be rather resilient during the trading session here on Friday, initially falling against the Canadian dollar but then turning around to show signs of life. This is a market that likes ranges, and Friday is showing this yet again.
We have a bounce from the crucial 1.3550 level. The 1.3550 level has been a pretty significant support area for quite some time. The market currently sees this as a beginning of significant support that extends down to the 1.35 level. Quite frankly, at the end of the day, we are starting to see interest rates perking up a little bit and with that being the case it does help the US dollar.
Market Dynamics and Historical Context
Ultimately, this is a market that I think has just basically found its bottom and now is looking to turn things around. I like the idea of playing the range yet again. This is a market that I think will remain very choppy and that’s typical of this pair. Because of this, patience will be key.
The massive amount of trade that gets done between these two countries does make it a bit of a noisy currency pair, but nonetheless, stability is what both governments want with the US dollar against the Canadian dollar.
If you look back really 3 or 4 years, we're right around the middle of the range and that’s where we’re bouncing from in favor of the US dollar, but ever so slightly. A run to the 1.37 level makes perfect sense to me and it’s possible that may be exactly what happens. I would anticipate a significant amount of resistance there though.