We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bullish
More View more
Canadian Dollar Outlook Positive as Crude Oil Prices Head Higher

Canadian Dollar Outlook Positive as Crude Oil Prices Head Higher

2019-04-23 09:00:00
Martin Essex, MSTA, Analyst and Editor
Share:

CAD price, oil news and analysis:

  • The Canadian Dollar has so far failed to benefit from rising oil prices on the demand by the US that other countries halt their buying of Iranian crude.
  • However, the news is likely to boost CAD near-term, sending USDCAD lower.

Canadian Dollar to Benefit from Rising Crude Oil Prices

Surprisingly, perhaps, the Canadian Dollar has so far shrugged off the US demand that all other nations stop buying Iranian crude oil or face sanctions. Canada is a major oil exporter so the CAD tends to rise when oil prices climb and fall when they dip.

By contrast, USDCAD is firmer in Europe Tuesday as the Canadian currency weakens marginally; a move likely to reverse near-term if crude prices continue to advance after reaching their highest levels since late October last year.

USDCAD Price Chart, Five-Minute Timeframe (April 22-23, 2019)

Latest USDCAD price chart.

Chart by IG (You can click on it for a larger image)

The US decided Monday to end exemptions allowing some countries, including China and India, to buy Iranian oil without facing US sanctions. It set a deadline of May 1 and said it was working with Saudi Arabia and the United Arab Emirates to ensure supplies. Nonetheless, the unexpected move lifted crude prices while failing to strengthen the Canadian Dollar.

While a near-term correction downwards in oil cannot be ruled out, it’s now likely that the Canadian Dollar will play catch up, and that USDCAD will drift lower.

Looking further ahead, the Bank of Canada is widely expected to keep its benchmark interest rate unchanged at 1.75% Wednesday and will likely keep it unchanged for the rest of the year. As ever, traders should listen carefully to any comments by BoC Governor Stephen Poloz suggesting that a rate hike next year is on the cards.

More to read:

Using news and events to trade forex

And you can the latest CAD news and analysis here

Further resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.