Home CAD presents Crude Crash

The Canadian dollar continues its Via Dolorosa: after holding out against the slide in oil prices for a few days, enjoying a positive jobs report and some sort  of correction, all hell has broken loose.

USD/CAD is trading well above 1.45, with a high of 1.4546 seen so far. On CAD/USD this is under 0.70. And it certainly goes hand in hand with oil prices.

WTI Crude Oil is trading under $30. No, it’s not the first time and also Brent went along that path. However, this time it may be more than a dip but perhaps we’re seeing the real thing. The fresh fall in Chinese stocks didn’t really help the mood.

Here is how it looks on the monthly chart: a big spike to sky high levels, reaching those seen in April 2003, when the Canadian dollar extended its gains following the US-led invasion of Iraq.

USDCAD January 15 2016 CAD crash

The upcoming week is a big one for the Canadian dollar: the Bank of Canada makes its rate decision. Last time this year, Stephen Poloz and his team surprised markets with a rate cut, which was explained as precautionary or as “insurance”. While lower rates could support the economy, the weak Canadian dollar already provides a lot of support.

In addition, we’ll  get economic indicators: retail sales and inflation data. Inflation may be rising despite the fall in oil: imported goods such are pricier.

More:  Is It Time To Cash In On USD/CAD Bets? – CIBC

And here is a fresh chart of  WTI Crude Oil, showing us the lowest levels since early 2004:

WTI January 15 2016 settling under 30 dollars

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.