The Canadian dollar deteriorated to three-week lows against the U.S. dollar on Friday as a sell-off in world oil prices overshadowed stronger-than-expected data on Canadian third quarter growth. Oil prices tumbled on Friday following Thursday’s decision by the Organization of the Petroleum Exporting Countries to keep its production quotas unchanged, fueling fears over a global supply glut.
Weekly bias remains on the upside as a fresh cross of 21 and 55 EMA emanates on the 4 hours time frame with SSRC, MACD and RSI oscillators in support of more bullish momentum. On the daily charts, price rejected the 55 EMA on November 21 2014 and headed for a retest of 1.14651 after the result of the OPEC meeting. A clear break of 1.14651 resistance will resume the current bullish trend and more rise to 1.17210 resistance is expected in the medium term.
However i am expecting a retracement or short decline in the early days of the trading week as an engulf pattern reflects on the 1 hour charts which shows a price rejection of the current supply zone located within the 1.14651 resistance zone. In other words, buying the dips could be a way of trading this pair for more profits.
Later on Wednesday, The Bank of Canada is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Also Canada is to publish data on the change in the number of people employed and the unemployment rate, as well as a separate report on the trade balance.
The U.S. is to round up the week with the closely watched government report on Non-farm payrolls, the unemployment rate and average earnings, as well as a report on factory orders.