9 Dec 2014
No domestic data today leaves CAD vulnerable Oil and USD moves – Scotiabank
FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes that absence of any domestic data today leaves the focus for CAD on broader developments in oil markets and USD strength.
Key Quotes
“Early in the Asian session, USDCAD reached fresh highs, flirting with 1.1500, before falling back to the mid 1.14s. There is no domestic data today; leaving the focus for CAD on broader developments in oil markets and the USD.”
“Yesterday’s domestic equity weakness, led by the energy sector, likely included foreign portfolio managers shedding Canadian equity exposure and accordingly resulted in CAD selling. The relentless fall of oil prices weighs heavily on the economic outlook and CAD—see chart; however it is worth highlighting even though the level of CAD and oil prices are correlated the magnitude of the shift is very different. Since the recent high in oil on June 20th, WTI is down 41% while CAD is down 6% - see chart. We expect CAD to continue to soften in the near-term.”
“Technical studies warn of building upside risk. Support comes in at recent congestion of 1.1442; while the next level of resistance lies at the psychologically important 1.1600, which we expect a test of in the near term.”
Key Quotes
“Early in the Asian session, USDCAD reached fresh highs, flirting with 1.1500, before falling back to the mid 1.14s. There is no domestic data today; leaving the focus for CAD on broader developments in oil markets and the USD.”
“Yesterday’s domestic equity weakness, led by the energy sector, likely included foreign portfolio managers shedding Canadian equity exposure and accordingly resulted in CAD selling. The relentless fall of oil prices weighs heavily on the economic outlook and CAD—see chart; however it is worth highlighting even though the level of CAD and oil prices are correlated the magnitude of the shift is very different. Since the recent high in oil on June 20th, WTI is down 41% while CAD is down 6% - see chart. We expect CAD to continue to soften in the near-term.”
“Technical studies warn of building upside risk. Support comes in at recent congestion of 1.1442; while the next level of resistance lies at the psychologically important 1.1600, which we expect a test of in the near term.”