Why is the CAD not any lower? Gold is off $60, crude is down $3, and Friday's U.S. data disappointed. As per usual, for an uninteresting currency that has been trading in a contained range so far this year, it is not surprising to witness a delayed reaction. The market should expect the loonie bears to come out of hibernation and finally want to sell some of their CAD dollars.
The currency bears will point to gold's long-term support levels being broken -- there is danger that this move lower continues. The next real level of support for the yellow metal is around the $1,475 area. It will be very interesting to see how the commodity bulls will react first thing next week.
There was no real news that sparked the Friday afternoon gold move lower. It feels as if the commodity bulls finally lost interest and threw in the towel. Prudently, we should expect more investors to step aside so as to wait and see how far this market shakeout progresses. Many have to be wondering what the logic is behind this move, especially with central banks globally -- and specifically Japan -- ramping up the money printing.
With the lack of domestic developments, the CAD remains beholden to external headlines. With domestic order books remaining relatively thin topside, prices continue to find better bids on dips for now. However, the game plan could change Sunday night.