Talking Points:
• The correlation between USDCAD and US oil prices is strong
• While one country is a producer and the other a consumer, both share the same pricing instrument - Dollars
• Fundamental themes wax and wane for influence and commodities is one of the refrained catalyst over time
See how retail traders are positioning in the majors in your charts using the FXCM SSI snapshot.
One of the favorite correlations made between the FX and commodity market is USDCAD to oil. That relationship proved productive through Monday's session. The energy market dropped below $40 and tested a fresh multi-year low in the process. In the same breath, USDCAD cleared its high for the year and a soared to highs not seen in over a decade. This related move was not a coincidence. Commodity production/consumption is a factor here; but how persistent and productive is this theme compared to the more classic drivers like risk trends and relative monetary policy? That is an important evaluation that needs to be made especially as we talk about extending new highs with the looming Fed rate decision next Wednesday. We discuss the influence of big picture fundamentals and commodities positioning in this hierarchy in today's Strategy Video.
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