FXstreet.com (London) - Canadian dollar was buoyed in the previous trading session as investor appetite for risk returned, weakening the dollar against its major trading partners. Three major factors buoyed CAD today, bounded oil prices, increased investor confidence and a better-than-forecast trade balance.
Canada, a major exporter of oil, has its currency strongly correlated to the price of the alternative asset. An improved trade balance for Canada and rising stock markets also helped strengthen CAD, as the market returned to riskier, high yielding currencies and away from the Dollar.
CAD/USD has traded tightly rangebound so far in the Asian session, in the range of 1.0508-1.0514. The pair currently quotes at 1.0510 (-0.04%) and we see these bounds as the primary support and resistance levels.
Thin December trade slow markets, as banks consolidate positions and look ahead to the new year and new opportunites. Low volume throughout December encourages this kind of trading pattern. Bloomberg reports notable reductions on month on month trade volumes on Wall Street.
James Chen attributes this tight range to a slow downward bearish trend, in this excellent technical insight.