The Canadian dollar showed some strength in resisting the slide in oil prices after their short squeeze and kept fighting for 1.40. And now, as oil stabilizes above $30, the Canadian dollar is showing further strength.
The story is not really a CAD story, but more general USD weakness. Nevertheless, the move in USD/CAD is one of the strongest ones out there, with a drop of over 1.2% to 1.3880 at the time of writing, the lowest in a month.
The move down in the dollar is a result of a dovish comment by New York President of the Fed Bill Dudley, which showed caution. It was not so surprising, but his words in August towards the September meeting also meant no rate hike then, and this could be a repeat now.
And the move came despite better than expected data from the US: ADP NFP beat expectations. And again, it is not only the buck’s weakness but the relative strength of the Canadian dollar: the loonie has been on a recovery path since the BOC surprised and did not cut the interest rate.
Oil prices are moving up with a climb back up above $30 in WTI crude oil. The peak so far is $30.92.
Here is how it looks in the daily chart. The pair traded at these level in early January. The low so far is 1.3836, but the pair bounced since then. 1.3787 is support, followed by 1.3620. Resistance awaits at 1.40.
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