USD/CAD Continues the Dive as Canadian Trade Deficit Shrinks

The Canadian Dollar is prone to Oil prices. Oil prices have fallen considerably in the last two weeks and USD/CAD has been trending higher.

Written by: Skerdian Meta • Wednesday, June 6, 2018 • 1 min read

• Last updated: Wednesday, June 6, 2018

Canada is increasing exporting to the world despite trade wars

The Canadian Dollar is prone to Oil prices. Oil prices have fallen considerably in the last two weeks and USD/CAD has been trending higher. Although, it hasn’t been a straightforward trade for forex traders who have been trading this pair.

Yesterday, however, this pair started turning bearish. USD/CAD climbed around 150 pips higher during the European session, but then reversed back down as Oil prices pulled back up.

The decline stretched further today in USD/CAD and the latest round of economic data from Canada gave it the last kick. Canadian trade balance stood at -$4.1 billion last month and it was expected to be -$3.4 billion this month.

But, the trade deficit shrank more than that. The actual number came at -$1.9 billion and last month’s number was revised lower as well to -$3.9 billion. This is another positive round of data from Canada. The building permits report wasn’t that positive to be honest, because permits fell by 4.6%. But the falling trade deficit is more important for the CAD right now.

Can the 100 SMA stop the decline?

The USD/CAD is still sliding lower and right now it faces two moving averages. The first comes just 5 pips below the current price. That’s the 100 smooth MA (red). The second is the 200 SMA (purple) and it stands around 50 pips lower.

I can’t get in this trade right now because the risk/reward ratio is not great since I would have to place the stop above the top which is nearly 200 pips higher. So, I will wait for this move to fade and then will look for a buy opportunity, probably at the 200 SMA.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.