CAD slumps as oil tanks

The slump in oil prices has taken a toll on big oil producing nations and subsequently their currencies.

Canadian Dollar
Source: Bloomberg

The Canadian dollar has been one of the biggest hit and continues to decline against the greenback. In fact, since oil topped out in late June 2014, the CAD has lost around 10% to the greenback. EUR/CAD has risen from a low of $1.062 to now trading at $1.175 with further gains looking likely. The uptrend in the pair has been relentless and with oil remaining volatile, the CAD is likely to come under further pressure EUR/CAD is trading at its highest since May 2009 and a near term squeeze to $1.200 could be unfolding here. Traders should eye buying dips in the pair into the $1.170 region where the pair consolidated in recent weeks. It’s not only CAD weakness I’m eyeing here but also potential USD strength as we head towards non-farm payrolls and FOMC meeting minutes. On Thursday we also have crude oil inventories data due out which is quite relevant at the moment.  

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