Oil rebound fans the CAD

The main theme in the fx space was a weaker USD on the back of some disappointing economic data.

CAD
Source: Bloomberg

Data prints out of the US including unemployment claims, manufacturing PMI and new home sales all disappointed and contributed to USD weakness. One of the more interesting moves was in USD/CAD where a resurgence in oil prices prompted the CAD higher. There has been an improvement in sentiment around Canada of late and USD/CAD has dropped in response. The key move was when the pair dropped below 1.2400, this triggered further weakness which has since taken it down to the 1.2200 region. There has been an uptrend in place since December which is now threatening to be broken. USD/CAD traded to a low of 1.2121 and that’ll be the level to watch in the near term. Naturally, a lot is hinged on what happens with oil prices. Should we see oil’s recovery continue, then the pair could be headed lower. Traders should look out for a close below 1.2100 as this would confirm a break of the uptrend.

 

USD/CAD
Click to enlarge

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