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.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about