USD/CAD to 1.33?

USD/CAD to 1.33?

USD/CAD to 1.33?

USD/CAD dropped for the second day in a row as oil prices pushed higher. The price of crude jumped nearly 4% despite the prospect of an output cut. Iraq oil minister Lualbi said on Sunday that the country plans to offer 3 new proposals this week at the cartel’s technical meeting. Putin also chimed in saying that a deal was imminent for OPEC and that Russia would follow suit with any plan for an oil freeze. Investors are clearly skeptical about a deal as OPEC failed to deliver at previous meetings and even if an agreement is reached we’ve seen a number of oil producing nations backpedal on their promises. On a technical basis oil looks like its headed higher which will be negative for USD/CAD but the main focus tomorrow will be on Canadian retail sales. The sharp 1.2% drop in wholesale sales reported today and the drop in full time jobs signals a potential contraction in spending. If we are right, we should see USD/CAD bounce but if spending falls short of expectations and oil extends higher, the recent “top” in USD/CAD to take the pair down to 1.33.

Technically, USD/CAD is still in an uptrend unless it breaks below 1.32 but that does not preclude a deeper pullback in the currency. With that in mind, there’s significant support below current levels at 1.34, 1.3350 and then more significantly at 1.33.

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