Loonie Tips Over

This week's array of CAD-negative dynamics (Canadian verbal intervention against excessive strengthening unexpectedly negative Canadian jobs figures and struggling emerging market equities), have created the first weekly increase in 4 weeks. Unexpectedly strong US labour figures proved a broad positive for USDCAD. While this unusually positive correlation between USD and equities requires confirmation, there is the probability that prolonged and broadening USD gains could slow down the rise in commodities, preventing oil from exceeding the 73.20 resistance, hence, CAD-negative. Verbal reminders from Canadian policymakers are also likely to re-emerge in the event of renewed CAD strength, especially that the Bank of Canada used 1.13 as the USDCAD forex rate for its base line scenarios. This week's USDCAD candle presents a typically bullish hammer which coincides with the 61.8% retracement of the major move from the 0.9059 low of Nov 2007 (which also showed a hammer recover). 1.0930 and 1.1060 appear to be the next targets. In terim support stands at 1.07, followed by 1.0620. A break below More on hammer candles http://web.streetauthority.com/terms/h/hammercandle.asp