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The USD/CAD pair fell below the recent lows on Tuesday, but bounced in order to form a hammer just below the 0.99 level. This pair does look like it's ready for a bounce of sorts, and we think that a run back to parity is very possible. On a break of the highs from the Tuesday hammer we are willing to start going long for a short-term trade against the Canadian dollar.
Obviously, the oil markets will have to be watched but they seem to be a bit consolidative at the current position. Because of this, we think that perhaps a little bit of profit taking could be found in this market, and it could give us about 100 pips to the upside. On a break of the bottom of the hammer, we think the 0.97 is a given at that point.