USDCAD Price Tumbling as Canadian Dollar Benefits From Rising Oil Prices
Canadian Dollar price, news and analysis:
- Crude oil prices continue to rally, benefiting the Canadian Dollar.
- CAD is also being helped by speculation that the Bank of Canada may continue to sound hawkish when it delivers its interest rate decision Wednesday.
USDCAD price under pressure
The Canadian Dollar is continuing to strengthen as oil prices rebound, speculation grows that the Bank of Canada may stick to its plan to raise interest rates when it announces its rate decision Wednesday and the US Dollar weakens.
As the chart below shows, USDCAD has fallen to its lowest level for just over a month and is now in a steep downward trend.
USDCAD Price Chart, Daily Timeframe (October 9, 2018 – January 8, 2019)
Chart by IG (You can click on it for a larger image)
Canada is a major oil exporter so is benefiting from the recent rally in oil prices, which have been helped by a weaker US Dollar, less pessimism about the US-China trade dispute, firmer equity prices and a report in The Wall Street Journal that Saudi Arabia may cut crude oil exports to 7.1 million barrels a day by the end of January.
Canadian interest rates
In addition, the Bank of Canada is expected to report this week that it is sticking to its plans to raise interest rates even though a decision to leave its benchmark rate at 1.75% Wednesday is widely forecast.
These factors combined have broken the upward trend in USDCAD in place since October last year and a potential technical target is now the lows at 1.3160/4 reached in early December.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.