USDCAD to 1.32

USDCAD to 1.32

USDCAD to 1.32

USD/CAD traded sharply lower for the second day in a row on the back of an unimpressive U.S. non-farm payrolls report and a stronger than expected Canadian jobs number. However the big news this week for Canada was the OPEC deal. After weeks of negotiation, oil producing nations finally agreed to cut production sending crude prices sharply higher. As an oil producing country, Canada will benefit significantly from the rise in oil prices and its currency has already shot up as a result. We believe that further losses are likely for USDCAD on a fundamental and technical basis. The Bank of Canada meets next week and they will happy with the turnaround in oil prices. Recent economic reports have also been positive with monthly and quarterly GDP reports beating expectations. Although Trump’s administration and policies pose a great risk for Canada, it is not clear how much of NAFTA Trump will end up scraping. So the BoC could choose to table the issue for the time being and focus on improving current conditions. If they are upbeat, it will lend further support to the Canadian dollar, sending USD/CAD to 1.32.

Technically USD/CAD has broken below the 50-day SMA, which is now resistance. There’s some support at the November 9th low of 1.3265 but the next level of key support is at 1.32.

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