USD/CAD Still Looks to Oil Dynamics – Rabobank

USD/CAD Still Looks to Oil Dynamics – Rabobank

5 May 2016, 08:59
Roberto Jacobs
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USD/CAD Still Looks to Oil Dynamics – Rabobank

Strategist at Rabobank Christian Lawrence has assessed the prospects of the pair and crude oil.

Key Quotes

“Although we have seen some very short-term breaks in the correlation between oil and USD/CAD, we expect this relationship to remain firmly in place over the course of this year. In fact, out of a total of 206 currency pairs we recently looked at, USD/CAD is the 14th most highly correlated cross to WTI oil on a 60 day rolling, daily percentage return basis. Only COP and RUB crosses show a stronger relationship”.

Oil prices have been well supported of late but we view this as being more about the improvement in broad-based risk sentiment than a fundamental change in the near-term outlook for oil”.

“Indeed, although we may see some further upside, we view this as limited and envisage a turn in sentiment driving oil back below 40”.

“The key question then is what will trigger a change in sentiment? Of course, this is very hard to pinpoint but the lead up to the June FOMC meeting and the UK referendum on the Brexit could well see fears rise again”.


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