The moment has finally come, after 7 months of range trading from 1.02 to 1.08, USD/CAD has broken down.
The catalyst was a stronger than expected Canadian employment report. Canada added 20.9K jobs in February compared to the 15.5K expected and +43.0K prior. The unemployment rate fell to 8.2% from 8.3%, no change at 8.3% was expected
The best economists we know are cautioning that hiring was heavily skewed toward government jobs and Olympic jobs, so there’s a bit of caution on the fundamental side.
The technical side, however, looks like this:
You don’t need to be an experienced technical analyst to understand the implications of the fall below 1.0207. It’s bearish, very bearish. The target is 0.96 but we will take the 2008 low of 0.9744 as our target.
We are also reminded of how much we like trading USD/CAD on technicals. Some things work technically better than others. Gold is a source of endless frustration for technicians but USD/CAD is a dream.
Our favourite examples are the triple top at 1.30 last year and the 0.97 to 1.03 range trade the played out in a generally text book fashion.