Canadian Dollar, Oil Post Parallel Losing Streaks to Start 2016
- Canadian Dollar fell for 7 consecutive days, the longest sell-off since 2013
- Oil mirrored Loonie weakness, marking the largest losing streak since 2015
- Selling pressure may return in risk-off trade on renewed Yuan depreciation
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Using FXCM’s Consecutive Bars Indicator, traders can see that the Canadian Dollar and crude oil prices have both posted a seven consecutive day losing streak. An eighth daily rise in the USD/CAD exchange rate will mark the Loonie’s longest devaluation against the greenback in nearly three years. Crude is in a similar situation. Thus far, oil has posted the longest sell-off since November 2015.
The parallel reaction between the Canadian Dollar and crude oil is likely due to the commodity being Canada’s top source of export revenue. The negative affect of the oil rout on the economy was noted in the Bank of Canada’s policy report in December. This means what while there is no high-level economic news coming from Canada this week, USD/CAD may still find volatility as prices mirror crude oil’s response to swings in risk appetite.