News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
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
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • PBoC sets Yuan reference rate at 6.6725 against the US Dollar - BBG
  • #Silver retracing its losses earlier in the session as price carves out a Bear Flag pattern With resistance at $25 holding firm, further losses appear in the offing A daily close below the 21-DMA (24.20) may open the door for a retest of 61.8% Fib support (21.74) $SLVR $SLV https://t.co/rCl3Ms3FB3
  • The Nasdaq 100 index looks set to pull back amid bearish momentum in the near term. The 50-Day Simple Moving Average (SMA) line may serve as an immediate support. Get your #equities update from @margaretyjy here: https://t.co/5Axsg6gAdd https://t.co/rToHnPLSeS
  • $GBPUSD the outlier early in the session, up marginally as UK-EU Brexit negotiators extend talks until October 28 https://t.co/ey92YW4RJw
  • #CrudeOil down 1.95% on the back of tightening #COVID19 restrictions in several European nations $EURUSD nudging marginally lower https://t.co/PUWTfKl08f https://t.co/XuyQOzV6sj
  • Market Snapshot Broad risk-off tilt to kick-off APAC trade #Gold and #CrudeOil prices plunging lower alongside the risk-sensitive $AUDUSD Haven-linked $JPY and $USD moving higher against their major counterparts
  • Wall Street Futures Update: Dow Jones (-0.504%) S&P 500 (-0.536%) Nasdaq 100 (-0.484%) [delayed] -BBG
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/zSCf8azESa
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am ET on DailyFX! https://t.co/lxd5fZnn4H
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/ZJOEtpGUIq https://t.co/tJWOXZCoBw
Opportunity in Reconvergence of USD/CAD and Oil Price Correlation?

Opportunity in Reconvergence of USD/CAD and Oil Price Correlation?

2016-10-11 03:20:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • Oil prices have extended a two week surge that started with OPEC's vow to curb their collective output
  • Russia's suggestion that it too would join the cap on supply pushed the commodity up to a 15-month high
  • The correlation between crude and USD/CAD has inverted recently - irregular occasions that eventual reconverge

See the DailyFX Analysts' 4Q forecasts for the Dollar, Euro, Pound, Equities and Gold in the DailyFX Trading Guides page.

Oil is generating one of the few paths that seems to be deviating from the general complacency infecting the broader financial system (equities, high-return, high-carry and other assets). With the Monday's extension pushing crude prices to a 15-month high close - but still short of a true technical break - we are on the verge of seeing a more dramatic bifurcation in the market's speeds. In weighing the potential for the commodity, we have to weigh the importance of its particular technical, fundamental and market condition affiliations. While it can offer some degree of pressure on the first two, it is difficult to override the third.

It is important to recognize that breaking 51.50 is not an assurance of trend. There have been many false breaks, small and large, over the past year-and-a-half. The burden of feeding a trend that can keep defeat the market's 'gravity' would be significant. What's more, if the all-market-consuming sentiment theme were to kick back in; it is more likely to generate risk aversion which would work against oil prices. The landscape is dubious when we look at this individual market in relief, but it becomes even more conflicted if we consider its prominent correlations. But, there may be just as many opportunities in the correlations.

There are economic and financial connections to energy prices. A prominent curb on US and global inflation has been the weak return of price pressures that have capped rate expectations and spurred QE if the Fed, ECB and BoJ are to be believed. More immediate in traders' crosshairs though are relationships like those with USD/RUB, USD/BRL and USD/CAD. The relationship between USD/CAD and oil in particular is a favorite among FX traders. That said, recently, we have seen the correlation (20-day rolling in our analysis) flip - and at a technically important juncture. Overtime, the relationship waxes and wanes; but it rarely deviates for long. What does that mean for commodity and exchange rate given their proximity to key technicals? We discuss that in today's Strategy Video.

To receive John’s analysis directly via email, please SIGN UP HERE.

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

DISCLOSURES