USD/CAD Nears 1.29 as Oil Drops
Offered tone around CAD gathered pace, pushing USD/CAD near 1.29 handle as oil prices dropped on caution ahead of producer’s meeting to be held over the weekend.
Output freeze unlikely to help CAD?
Output freeze agreement only indicates major producers are ready to come to common terms to support prices, but will still leave markets oversupplied by about 2 million barrels per day.
Furthermore, oil has already rallied ahead of the producer’s meeting. Hence, signing of output freeze accord could see oil drop on “sell the fact” trade and thus may also lead to weakness in CAD.
In the short-run, the pair may continue its downward move if Fed rate hike bets fall even further or major producers point to output cut, although that is highly unlikely to happen any time soon.
USD/CAD Technical Levels
The pair currently trades around 1.2890 as both oil benchmarks are down almost 3%. The immediate hurdle is seen at 1.29, above which prices may test 1.2968 (hourly 200-MA). Next major hurdle is seen at 1.30 levels. On the other hand, a break below hourly 100-MA at 1.2842 would shift risk in favor of a cut through 1.2831 (hourly 50-MA) and drop to 1.28 levels.
(Market News Provided by FXstreet)