Dollar/CAD woke up from its range and jumped. The pair trades at 1.3487, some 100 pips up on the day. The next line of resistance is 1.3540, followed by 1.36. Support is at 1.3460 and 1.3380.
The Canadian dollar is showing us that it is a commodity currency by reacting to the downfall in the price of the “black goldâ€.
WTI Crude Oil dropped by some $2 to $50.38, or nearly 4% on the day. This is still within the recent ranges, but quite a drop. Why is oil slipping lower?
The latest trigger comes from the weekly report on inventories. There were no surprises at the headline number and it even dropped by 1 million barrels. This should be good news, but the underlying report also exposed a rise in US output.
OPEC and non-OPEC countries cut oil production and pushed prices higher. These higher prices triggered a ramp up in US output, which in turn weighs on the price.
More: CAD: BoC Still Leans Towards A Cup Half Empty View – CIBC
Here is how it looks on the daily Dollar/CAD chart:
And WTI Crude Oil certainly looks negative:
