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A combination of oversold technical factors and greater demand for higher risk assets should help to pressure the USD/CAD on Tuesday. The weaker U.S. Dollar is also driving up commodities priced in dollars such as crude oil and gold. Since these two commodities are major contributors to the Canadian economy, higher prices for crude oil and gold should translate into a higher Canadian Dollar.
Since there are no major economic reports in Canada or the U.S. on Tuesday, demand or the lack of demand for higher risk assets will be the driving force behind the price action. If traders want risk, look for the USD/CAD to fall. If there is demand for safety, then traders should watch for the U.S. Dollar to rise against the Canadian Dollar.