USD/CAD: correction will not hurt. Trading Recommendations
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Today at 15:30 (GMT) US Department of Energy publishes data on changes in stocks of crude oil and petroleum products in the country over the last week. The price of oil is growing slowly with the opening of the trading day, as traders expect a reduction of growth stocks (1,600 million barrels of oil compared to 4.224 million in the previous week). The night before, on Tuesday, the American Petroleum Institute (API) published data that pointed to a slight decline in commercial stocks of oil per week (per 500 000 barrels).
In anticipation of the next OPEC meeting to be held on December 4, there is another influencing oil prices are a political factor that is associated with the beginning of the bombing terrorist camps in Syria, the French military aircraft. In connection with this increase the risk of disruptions in oil supplies from the Middle East.
Nevertheless, oil prices will remain under pressure in the medium term due to the oversupply of oil on the world market. Also, market participants do not expect OPEC to change the strategy of oil production and exports, is expected to maintain high volumes, despite the fall in prices.
Moreover, OPEC may raise official production limit because of the return of the cartel Indonesia, which would entail an additional supply of oil in the world, not counting the expected shortly Iranian oil.
In this regard, the Canadian dollar, the most closely related quotations with oil prices to remain under pressure until oil prices decline. Canada is a net exporter of oil, and its oil sector is a crucial part of the economy, is directly dependent on the revenue of export earnings from oil sales.
On Monday released a weak report on shipments in the manufacturing sector of Canada. The volume of industrial supplies fell in September by 1.5% against growth of 0.1% forecast and a decline of 0.2% in the previous month, indicating a decrease in market demand.
Earlier in October, the Bank of Canada left its key interest rate unchanged at 0.5%, and noted that to sustain growth, inflation and the economy the Bank of Canada will be inclined to hold soft monetary policy. According to the Bank's inflation will remain below the target level of 2% before 2017, and the forecast of economic growth in Canada for 2016, 2017 lowered. Full utilization of the Canadian economy is now possible not earlier than in 2017.
The next meeting of the Bank of Canada on monetary policy in the country will be held on December 2.
Additional pressure on the Canadian dollar in the pair USD / CAD has an expectation of higher interest rates in the US. Consequently, in the short term (2 - 16 December) and in the medium term USD / CAD pair will grow. Any reduction should be seen as a pair of correction as to enter into a long position.
From the news today are waiting for data on the construction of new homes in Canada and the United States in October, scheduled for 13:30 (GMT). Later, at 15:30 published data on reserves of oil and petroleum products in the US, and at 19:00 – «minutes FOMC». The protocol will reflect the current economic and financial conditions in the United States, as well as affected the monetary policy and the prospects for interest rate increase at the next Fed meeting on 15-16 December.
Given the high volatility during the news release indicated, it is necessary to exercise caution in making trading decisions.
See also review and trading recommendations for the pair USD/JPY!
