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Oil Rally Lifts Loonie

Categories: AUD, CAD, EUR, GBP, Markets, News, USD

The Canadian dollar got a boost overnight.  Saudi Arabia and Russia agreed to extend production cuts beyond the end of 2017 to March 2018.  They pledged to do “whatever it takes” (Mario Draghi said “hey, that’s my line) to reduce global inventories to their 5-year average.  As usual, the reaction of US shale producers will be the monkey wrench in the plans.

WTI prices soared, rising 3.1 %, from $47.77/barrel to $49.43 in Europe, before easing back to $49.17 at the start of New York trading.

USDCAD dropped steadily, falling from an overnight peak of 1.3717 to 1.3617 in early New York trading.  The sell-off was worsened by positioning extremes. Canadian dollar short positions for the week ending March 9 were at an all-time high.

USDJPY dipped in Asia as another North Korea nuclear test led to some safe have yen buying. The retreat was also due to the soft US data from Friday, which some believe, diminished expectations for a June rate hike by the Fed.

Higher than expected China retail sales (Actual 10.7%, y/y) vs. forecast 10.6% gave AUDUSD and NZDUSD a boost.  Those moves were supported by the rally in oil prices.

EURUSD continued to probe topside resistance.  This morning’s break above 1.0955 targets 1.0995 and then 1.1100.  EURUSD is supported by Friday’s poor data showing from the US, the sharp decline in Eurozone political tensions (Angela Merkel’s party got a boost in weekend elections) and rising concerns that the ECB will begin tapering sooner rather than later.

Sterling rode the dollar down-move wave. This morning, traders have forgotten last week’s concern that the Bank of England was viewing Brexit risks through rose-coloured glasses and bought Sterling.  GBPUSD rose from 1.2882 to 1.2933 in New York trading.

 There is only US NAHB Housing Market Index data today which won’t help traders.  The focus will be on oil prices and whether the Saudi and Russia pledge to extend oil production cuts to March 2018 will become reality. The lack of US data will keep the greenback on the defensive.

USDCAD bulls will be nervous.  The break below 1.3640 has put 1.3520 in play and they are very aware of the stop losses lurking just below 1.3570.

Overnight Ranges

15-May

High

Low

USDCAD 1.3620 1.3720 1.3617
EURUSD 1.0953 1.0958 1.0923
USDJPY 113.44 113.72 113.13
GBPUSD 1.2926 1.2938 1.2882
USDCHF 0.9981 1.0018 0.9978
AUDUSD 0.7439 0.7439 0.7385
NZDUSD 0.6910 0.6909 0.6851
USDMXN 18.7005 18.7943 18.7000
WTI   49.37 49.43 47.77
Close 4:00 pm EDT-Open 6:00 am EDT

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish.  The break of 1.3680, the intraday uptrend line from the April 13 low and then multi-bottom support at 1.3640 opened the door to further losses to 1.3570.  A break of 1.3570 will target 1.3440.  A move above 1.3710 would negate the downward pressure.  For today, USDCAD support is at 1.3605, 1.3570 and 1.3510.  Resistance is at 1.3660 and 1.3710

Today’s Range 1.3570-1.3660

Chart: USDCAD 1 hour

usdcad-1-hour-chart

 

Agility Forex Author: Agility Forex

Agility Forex is a Canadian cross-border payment specialist. They are Canadian owned, operated out of Vancouver and are registered with Fintrac, the Canadian government agency that oversees the money transfer industry. They specialize in all things Canadian Dollar and aim to provide the best service and best pricing on all Loonie cross rates. Visit Agility Forex.

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