Home USD/CAD: Trading the US Crude Oil Invetories

USD/CAD: Trading the US Crude Oil Invetories

US Crude Oil Inventories measures the change in the number of crude barrels held in inventory.  The report is published each week. A reading which is higher than the market forecast is bullish for USD/CAD.

Here are all the details, and 5 possible outcomes for USD/CAD.

Published on Wednesday at 14:30 GMT.

Indicator Background

As Canada is a major oil producer, the Canadian  dollar  often mimics the movement of oil prices and improves when oil prices rise. Traders should pay  close attention to  this indicator, as an unexpected reading can  have a strong  impact on  the movement of USD/CAD.

Crude Oil Inventories declined 0.9 million last week, surprising the markets which had expected a small gain of 0.3 million. This marked a fourth straight decline. Another decline is expected in the upcoming release, with an estimate of -1.9 million.

Sentiments and levels

The Fed stayed on the sidelines last week, and we may not see a rate hike before September. Canadian numbers have been solid, and US numbers appear to have recovered after the dismal Nonfarm Payrolls report. We could see volatility during the week ahead of the Brexit vote on Thursday.  So, the overall sentiment is  neutral on USD/CAD towards this release.

Technical levels, from top to bottom: 1.2990, 1.29, 1.2780, 1.2663, 1.2538 and 1.2459.

5 Scenarios

  1. Within expectations: -2.5M to -1.3M. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: -1.3M to -0.7M: An unexpected higher reading can send  the pair  below  above one support line.
  3. Well above expectations: Above -0.7M:  A small decline or a surplus could push USD/CAD below two support lines.
  4. Below expectations: -3.2M to -2.6M:  A  weaker reading than expected could cause  the  pair to break above on resistance line.
  5. Well below expectations:  Below -3.2M. In this scenario, USD/CAD could break above a second resistance line

For more on the loonie, see the USD/CAD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.