USD/CAD Forecast December 19, 2012, Technical Analysis

The USD/CAD currency pair rose during the session on Tuesday, but remains consolidating between the 0.98 and 0.99 handles. We think this pair will be one of the most sensitive to the so-called “fiscal cliff”, and as a result the market is essentially waiting to find out how that ends. It also is sensitive to the oil markets, and those are essentially consolidating as well. In fact, we think that until we get some type of resolution to the fiscal talks in Washington DC, this pair will do very little. If we get good news, this pair should break down as risk will reenter the market and people will flood into the Canadian dollar. Alternately, if we get bad news, a lot of times they will by the US dollar for safety.