USDCAD: Canadian Dollar Weakened by Crude Oil Price Slippage
CAD price, news and analysis:
- The Canadian Dollar is beginning to edge lower as the price of crude oil – production of which is a major sector of the Canadian economy – has eased back this week.
- That has helped USDCAD, although the advance could be short-lived.
USDCAD lifted by easing crude oil price
The price of crude oil has eased gently this week after strengthening throughout the year so far on tight supplies and concerns about output from Venezuela, and that has begun to undermine the Canadian Dollar. However, CAD has slipped only modestly and the consequent rally in USDCAD could well run out of steam.
As the chart below shows, the USDCAD price has yet to break through resistance at a trendline joining this year’s lower highs and a sustained break above 1.32 would be needed to confirm a change of direction.
USDCAD Price Chart, Two-Hour Timeframe (December 31, 2018 – February 6, 2019)
Chart by IG (You can click on it for a larger image)
For now, the crude oil price is suffering from reports that the American Petroleum Institute has estimated that US crude inventories rose by a hefty 2.5 million barrels in the week that ended on February 1. However, the impact has been offset by a report in The Wall Street Journal that Saudi Arabia and its Persian Gulf allies are proposing a formal partnership with a 10-nation group led by Russia to try to manage the global oil market.That should limit the downside, and therefore the effect on the Canadian Dollar.
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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.