Oil turmoil puts CAD under pressure

Weakness in the Canadian dollar remains a key theme to look out for as the turmoil in oil prices continues to unravel.

Canadian Dollar
Source: Bloomberg

The slump in oil prices has taken a toll on big oil producing nations and subsequently their currencies. Yesterday, I highlighted that there could be buying opportunities in  USD/CAD in anticipation of a potential squeeze higher towards the $1.2000 mark in the short to medium term. USD/CAD was relatively flat in yesterday’s trade and continues to knock on resistance in the $1.1850 region. I feel a break above $1.1850 could be a key trigger for further gains, as it was also the high from last week. Momentum is also on the side of the greenback at the moment with inflows into US treasuries. The only deterrent is the fact the pair is a touch overbought and in that case any pullbacks could also be used as a buying opportunity. There is a lot of key data for Canada in today’s trade including the country’s trade balance, Ivey PMI and crude oil inventories. On the US side of the equation we have ADP non-farm payrolls and FOMC meeting minutes.

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