FXStreet (Mumbai) – USD/CAD reversed entire yesterday’s fall and climbed further towards thirteen-year highs above 1.46 handle, before meeting fresh supply near 1.4645 region.
USD/CAD: US oil hits fresh 12-year lows.
Currently, the USD/CAD pair rises 0.33% higher at 1.4625, having tested fresh multi-year highs near 1.4645 levels. The USD/CAD pair halted its bullish run and edged slightly lower as persisting risk-off trades weighed on the risk currency USD and therefore, capped the gains in the pair.
The Canadian dollar was hammered once again close to multi-year lows versus its American rival after the oil prices reversed the rebound and fell back in the red on persisting glut worries, particularly after the IEA report published yesterday.
At the moment, both crude benchmarks are deep in the red, with the US oil (WTI) down -2.45% at $ 28.70, while the Brent drops -2.13% to 28.17 levels. WTI hit fresh 12-yr lows earlier this session at $ 28.21.
Looking ahead, the risk remains to the downside for the CAD in wake of the falling oil prices and also on increasing BOC rate cut talks at its monetary policy meeting later in the NA session.
Analysts at Brown Brothers Harriman (BBH) explained, “A (BOC) rate cut would not be surprising. However, subjectively we see a modest chance that with the new government pursuing a more accommodative fiscal policy that the central bank bides its time. It also may not want to be seen panicking in response to the market turmoil over the last couple of weeks, which has included a 4.7% decline in the Canadian dollar, which is tantamount to some degree of easing. Even if the Bank of Canada chose to ease policy, it might prefer to launch an asset purchase program instead of pushing the overnight rate any lower (currently at 50 bp).“
USD/CAD Technical Levels
To the upside, the next resistances are seen near 1.4654 (Jan 18 High) and 1.4700 (multi-year highs). To the downside, immediate support might be located at 1.4600 (psychological barrier) and below that 1.4551 (20-DMA).
(Market News Provided by FXstreet)