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USDCAD – How High?
USD/CAD has taken out the 1.1500 level for the first time since 2009 as the price of crude continues to sink dropping below the $60/bbl line. Although Canada is a well diversified economy, energy still makes up 7% of the country’s GDP and the prolonged slide in oil is starting to take its toll as traders begin to price in the possibility of lower CAPEX and slower growth for the foreseeable future. Meanwhile the true extent of oil slide on the Canadian economy will only become evident if prices stay low for a considerable period of time. For now however the pair may run into longer term resistance at the 1.1500-1.1700 corridor.
The break of the 1.1500 level while important still does not provide clear sailing for the loonie because the pair has a resistance overhead all the way to 1.1700 so progress much beyond this point may be stalled. A break above however would open a run to 1.2000 while only a move below 1.1200 would negate the bullish bias