Canadian Dollar Outlook: USD/CAD Key Levels to Watch for OPEC
- USD/CAD | OPEC to Lend Support to CAD on Production Rollover
- IG Sentiment Signals Bearish USD/CAD For Now
USD/CAD | OPEC to Lend Support to CAD on Oil Production Rollover
The focus for commodity linked currencies will be on the OPEC+ meeting, where it is expected that production quota’s will be rolled over, including Saudi Arabia’s extra 1mbpd cut throughout May. Overnight, source reports confirmed as much with Saudi Arabia reportedly prepared to support extending oil cuts by OPEC+ into May and June as global oil demand is not yet high enough to warrant more oil supply. However, reports from Saudi sources this morning noted that it was premature to assume this outcome.
That said, it is important to note that ahead of OPEC meetings the rumour mill tends to go into overdrive as oil ministers looking to manage expectations. Reminder, last month, expectations had been that OPEC+ would raise production, in turn, by not raising production at all, oil prices surged. Going into this meeting now, the base case is for OPEC+ not to boost production therefore taking away the element of surprise in this scenario. Although, this is likely to help underpin oil prices, particularly after its recent correction and by extension support the Canadian Dollar, particularly against the JPY. Taking a look at CAD, the currency has had a rather subdued session thus far, trading in a narrow 30pip range, although with yields lending support to the greenback, USD/CAD looks to make another test of resistance at 1.2625-30, while the 50DMA sits above at 1.2644. That said, I still favour support for the CAD going forward with oil prices likely to underpin, as well as the BoC beginning to taper QE purchases in April. On the downside, support resides at 1.2560 with 1.25 below.
Canadian Dollar Technical Levels
Feb 25th low
USD/CAD Chart: Daily Timeframe
IG Sentiment Signals Bearish USD/CAD For Now
IG CLIENT SENTIMENT: Retail trader data shows 59.98% of traders are net-long with the ratio of traders long to short at 1.50 to 1. The number of traders net-long is 6.23% higher than yesterday and 6.39% lower from last week, while the number of traders net-short is 16.15% higher than yesterday and 38.53% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.
Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.