- Posted by Jason Ayres on November 19, 2010 filed in Options Market
In my last post, I explored the likelyhood of a USD bounce as the USD/CAD tested a key support level. See A USD State of Mind. I referenced the correlation between a strengthening USD and its impact on commodities. As the USD bounced, we saw gold pull back to 1330 and oil migrate to a low of $80.00.
After a strong rally we have seen a pullback in the USD/CAD pair, this has seemingly sparked a moderate retracement higher in gold (December futures at 1355..and oil testing $82.00 as I write).
With that in mind, I am looking at a support level of 1.02 for the USD/CAD. If this 4 day pullback in the USD/CAD is contained with in the 1.0150/1.020 zone, we are likely to see a push towards 1.03/1.04. This thrust higher in the USD should be the catalyst for gold 1300 and oil re-testing $78.00/$79.00. see USD/CAD Daily Chart November 19, 2010.
Remember, you can trade your views on the USD/CAD by using USX options. Simply multiply the spot market value of the pair by 100 to interpret the appropriate strike price to use. Buy Calls if you expect the USD to strengthen against the CAD.
Until next time!