USD/CAD looking at oil prices for direction

10 February 2015, 14:19
Andrius Kulvinskas
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Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, explains that USD/CAD is stuck in the 1.2352 to 1.2564 range, and is looking at oil prices and WTI’s ability to break and close above 50‐day at 53.51 levels for direction.

Key Quotes

“CAD is down 0.1% trading within a narrowing range with February 3rd’s range technically important, leaving 1.2352 to 1.2564 as key levels to watch.”

“[..]a shift below 1.2352 is likely to be foreshadowed by WTI oil prices breaking and closing above the 50‐day moving average. Domestic data this week is unlikely to be the driver but big broader developments could support this shift."

“[..] a shift above 1.2564 is likely to be foreshadowed by declines in WTI oil prices back to its recent lows of $43.58.”

“[..] there is no domestic data leaving the focus on oil and the broader USD movement. Unless oil breaks and closes above its 50‐day MA we see better risk reward elsewhere for near‐term traders; over the medium term we expect CAD to fall victim to further deprecation.”

“USDCAD short‐term technicals: mixed—technical studies on USDCAD are shifting from bearish to negative. The MACD has generated a strong sell signal; while the candlestick pattern of an narrowing range warns of indecision. We see the February 3rd range as support and resistance (1.2352 to 1.2564).”
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