The Canadian Dollar declined for the first time in ten days after crude oil came under pressure and dropped below $90 per barrel. Earlier in the trading session, the currency fell against the U.S. Dollar on speculation economic growth would drive demand for the nation’s resources, which account for about half its export revenue.
Besides the drop in oil prices pressuring the market, news that U.S. factory orders unexpectedly increased gave the Greenback a boost as thoughts shifted toward an improving economy.
The focus should remain on commodity prices today as well as the shedding of stock market assets. Crude oil and gold should continue to have the largest influences on the Canadian Dollar’s direction, but another sharp sell-off in equities should draw the attention of traders also.
The morning’s focus will be on the ADP Employment survey. U.S. markets are likely to overreact to this morning’s guesses as traders try to adjust their positions ahead of Friday’s Non-Farm Payrolls number. Pre-report guesses are for an increase of 140.000 jobs in December.
Canada is expected to report that 20,000 jobs were added in December. This will be a slight improvement of the 15,200 jobs increase from November.
Technically the USD CAD is in a downtrend. The current range is 1.0208 to .9887. This range creates a retracement zone at 1.0047 to 1.0085.
On Tuesday the market took out downtrending resistance at .9968 and is now set up for a possible rally to 1.0088 over the near-term. The size and strength of the rally will be determined by the direction of the outside commodity markets.
