With solely hours left within the buying and selling day, the USD/CAD is hovering close to the 1.2500 deal with, down modestly from the weekly open (1.2536). From a basic standpoint, it’s stunning that the previous 5 periods didn’t deliver contemporary yearly lows.
Mid-April has been an fascinating time in finance, highlighted by rising oil costs, potential navy battle, and the spike in cryptocurrencies. For the USD/CAD, there are a number of market drivers that time to bearish months forward. Right here’s a fast take a look at the Loonie’s key underpinnings:
- WTI Pricing: At press time (about 1:30 PM EST), June WTI crude oil futures are buying and selling above $63.00. This represents a 6.67% achieve on the week and preservation of this yr’s uptrend.
- Battle Footing: The geopolitical story of the month has been rising tensions between Russia, Ukraine, and the US. In response to navy buildups on the Ukraine/Russia border and the SolarWinds hack, POTUS Joe Biden selected to subject a contemporary spherical of sanctions on Russia. Whereas all-out warfare between the U.S. and Russia stays an outlier, any Russia/Ukraine battle will drive world oil costs increased.
- Financial Coverage: In final Sunday’s 60 Minutes interview, Fed Chairman Jerome Powell said that the U.S. financial system is at an “inflection level.” After all, he gave no concrete opinions as to when the Fed would start strolling again limitless QE. For the USD, it appears to be like just like the 0% rates of interest and big Fed debt purchases might proceed via 2022.
If nothing else, these three points level to increased oil costs and a dovish USD. Within the occasion Canada makes progress on the COVID-19 entrance and experiences an financial surge, the USD/CAD is probably going headed a lot decrease.
USD/CAD Holds The Line At 1.2500
For the USD/CAD, the lengthy and intermediate-term traits are down. Because of this, this pair seems destined to revisit 2021’s Low (1.2356).
Overview: With the third full buying and selling week of April prepared to start, a bearish bias is warranted for the USD/CAD. If charges shut beneath 1.2500 at present, a take a look at of 1.2356 might come as early as subsequent week.
A bit earlier, the Baker-Hughes Rig Depend was launched to the general public. The variety of U.S. oil rigs in operation grew to 344, up from 337 final Friday. Whereas nonetheless traditionally low, at present’s rig depend suggests rising optimism within the U.S. shale business. Additionally, it exhibits a whole 180-degree shift in sentiment from that of April 2020.