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USD/CAD Hits Targets – Update
If you caught my post last week, I said my favorite trade at this time is short USD/CAD. I was looking for a move to 1.0150 (at that time it was at 1.04), which was reached earlier today. Here’s the chart. Here’s the USD/CAD setup. It could still head lower. The fundamental reasons for my original idea still hold so I remain bullish CAD.
I am extremely bullish Canadian dollars following the hot employment report. A total of 108.7k Canadians found new work in the month of April, driving the unemployment rate from 8.2 to 8.1 percent. Not only was this the fourth consecutive month of positive job growth but also the strongest job growth ever. The labor market in Canada has improved significantly in recent months and combined with the recent sell-off in loonie, there is a good chance that the Bank of Canada will raise interest rates in June. This would make them the second most aggressive G20 central bank -- which will be extremely positive for the loonie. As a result, I think USD/CAD will trade down to at least 1.0260 and possible even 1.0150 (it is currently at 1.04)