USDCAD has been trending higher and moving inside an ascending channel on its 4-hour time frame. Price is currently testing the resistance and seems to be indicating that a test of support is in order.

Stochastic is indicating overbought conditions and is turning lower, which means that buyers are exhausted and allowing sellers to take over. In that case, the resistance at the 1.3400-1.3450 could keep further gains in check, possibly leading to a drop to the channel support at the 1.3100-1.3150 area.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is narrowing so an upward crossover might be due, possibly drawing more buyers to the mix. If buyers are eager to jump in, the mid-channel area of interest at the 1.3250 level could hold as support.

Economic data from the US came in slightly weaker than expected on Friday, as the NFP report printed a 161K gain versus the estimated 174K increase. The unemployment rate fell from 5.0% to 4.9% as expected while average hourly earnings rose 0.4% versus the 0.3% forecast.

As for Canada, jobs data came in above consensus, as the economy added 43.9K positions in October versus the estimated 10K drop. The Ivey PMI also beat expectations with a rise from 58.4 to 59.7, reflecting stronger industry growth. However, the trade balance showed a weaker than expected 4.1 billion CAD deficit versus the projected 1.7 billion CAD shortfall and the previous 2 billion CAD deficit. 

Only medium-tier reports are due from the US today and none are due from Canada. The upcoming US elections could carry more weight in terms of dictating dollar price action, as higher odds of a Clinton victory could be positive for the dollar. Over the weekend, FBI director Comey announced that the agency found no evidence of wrongdoing in their investigation on Clinton’s private email server.

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