USD/CAD Latest News
USDCAD yesterday that 1.3240 would be a tough nut to crack and that we should be expecting a lot of consolidation and correction below this region as the market awaited the next direction. This is what we got for most part of the day yesterday till the NY session began. The pair wandered aimlessly between 1.3200 and 1.3240 for most part of the day and joined other pairs in just waiting for something to happen to break the monotonous range. But it was that kind of a day when there was nothing to look forward to and even the couple of events that were looked towards ending the ranging drew a blank and we got some more ranging below 1.3240 and above 1.3180.
And then came the surprise announcement for the day. The oil producers meeting was happening in Algiers and all along, the market was not expecting any major announcement from the producers as the general feeling was that the meeting was more consultative than decisive. In fact, it was also believed that most of the participants had already left the meeting but then came the announcement that the producers had reached a deal to cut the production output to support the oil prices and prevent it from falling further.
This cheered the markets and led to a general risk-on environment. We had also been repeatedly mentioning that the USDCAD price was connected to the Oil price as the Canadian economy depended a lot on oil prices. The increase in oil price helps their economy and causes the strengthening of their currency. So, this announcement of the cut led to increase in oil prices and caused the USDCAD to fall down. It immediately fell 120 pips from 1.3200 post the announcement and reached the support at 1.3040 that we had mentioned yesterday. It sits at 1.3070 as we write this.
Though this is a big positive for oil prices, we continue to remain bullish on this pair as the effects of lower oil prices over the past few years is beginning to show on the Canadian economy. These effects are not likely to vanish overnight and we believe that the data coming out of Canada over the next few weeks would reflect the weakening economy and this would weaken the CAD and hence help the bullish run in USDCAD.
For today, we do not have any major news from Canada and we have the GDP figures from the US later on. We expect the pair to hold support in the 1.3000-1.3040 region and on the upper side, we have resistance at 1.3150. Below 1.3000, we could be looking at 1.2870.