The US dollar fell against the Canadian dollar on Friday, as the Canadian employment numbers came out better than expected.
USD/CAD
The US dollar has pierced the 1.4150 level to the downside, which hopefully offers a nice buying opportunity.
You can make the argument that perhaps we could go down to the 1.40 level, but most of what we're seeing here, I think, is a reaction to 2 things during the session. We got the employment numbers coming out of Canada at 18,200 added, which was almost double anticipated, and the unemployment rate is 6.5% instead of 6.6%. Furthermore, the tensions between the United States and Iran have picked up, and while that will help the dollar in the long term, in this particular pair, sometimes there's a little bit of a knock-on effect due to oil rising. You're not going to see it here as much as you would, maybe the Canadian dollar against the Japanese yen, for example, or even the Euro against the Canadian dollar, but it does have a little bit of an effect. Keep in mind that the United States produces almost 14 million barrels a day.
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That being said, the interest rate differential is still going to favor the United States, and as a result, you are going to be looking at the spread still paying you 1% holding to the upside.
Robust Canadian Jobs Data and Oil Rebound Fuel USD/CAD Pullback
The massive move higher, I think, demands a bit of a pullback, and this I'm perfectly fine with. I think buying somewhere near the 50-day EMA is going to be the plan if we do get some downside momentum. I don't want to short this; quite frankly, if I were going to short the dollar, I'd do it against something a little stronger, like the pound, maybe, or possibly the Australian dollar.
As things stand right now, though, this to me looks like it could present a buying opportunity. If we break back above the 1.4150 level between now and the end of the day, that wouldn't surprise me either.
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