The Canadian dollar extends its losing streak. USD/CAD hit a new high of 1.2778, getting closer to the cycle high of 1.2834. Only a few hours beforehand, it had struggled with 1.27.
What has changed? New data came out worse than expected but also the old problem of falling oil prices intensified.
Canada’s trade balance came out at a deficit of 3.3 billion, worse than 2.6 expected and 3 billion seen in the previous month. With a widening trade deficit, there is less support for the C$. The US also has a trade deficit, but this time it actually came in at a narrower level than expected: 41.9 billion instead of 42.5 expected.
But the bigger driver remains the black gold. Brent crude is down over 2% to $55.30. More importantly, WTI Cure is down around 3.5% to $50.73. The long period of stability seems to be over. The sell-off in commodity prices is wide, and also hurting AUD/USD, which is making new 6 year lows all the time.
Needless to say, the crisis in Greece also takes its toll. The loonie is a “risk currency” that is sold off, while the US dollar remains a safe haven.
USD/CAD has reached the peak of 1.2775 seen in late May. There is some resistance at the round number of 1.28, but from there the road is short to 1.2834. On the downside, there is some support at 1.27 but real support awaits at the June highs of 1.2560.
Here is how it looks on the chart.
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