Loonie over the past few session has fallen steadily against Dollar and after yesterday’s FOMC minutes it has decisively broken above 1.3 handle, indicating further decline may be on the card.
Since May 3rd, oil price has gained as much as 10%, however Canadian Dollar has failed to benefit from the rise as raging wildfire in Canada has taken out as much as 1.8 million barrels/day production capacity. It is now likely that resumption of production will take much longer than usual.
Now, with stronger Dollar, gaining from better economic dockets coming out of United States and support of FOMC for a rate hike in June is likely to keep Dollar well bid, heading into next month’s FOMC.
In addition to that, stronger Dollar will keep a lid on oil prices and as Canada will resume production it is likely to suffer selling pressure.
Trade idea –
With above outlook, we expect, Loonie to decline to as much 1.4 area from current 1.307 with stop loss around 1.25. 1.32 area remains as only major hurdle to the target.
The material has been provided by InstaForex Company – www.instaforex.com