The first thing is the economic condition between US and Canada.
USA is the main trading partner of Canada. 80% export product of Canada has destination is US, so if US economy is positive, Canada economy is positive too.
We saw US economy last week was so good. Labour market, Consumer Spending, Retail Sales, PMI, GDP are also very positive proving US economy is stronger. This also benefits Canada economy.
Last week, BoC announced they will keep economic policy, unchanged interest rate and dovish comment while economic data is mixed.
What we can see now is the hesitation of traders all over the world about taper.
There are a lot of speculations about the time FED will taper. Some believe in this December, some say in March. They don’t know what exact time for taper is.
The problem on the table now is taper or no taper in Dec ? , and how that decision affects USDCAD ?
If FED taper this Dec . USD is stronger cause less USD is injected into market.
If DED no taper this Dec , USD is still stronger against CAD because following reasons:
- BoC wants weak CAD to support export to US
- Strong US economic data pulls USD stronger.
In both cases, USDCAD trend is still no matter what taper or no taper.
I think U/C found its support I show on the chart. And this support is respected stably.
Stop Loss: 1.058 23% Fib retracement.
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