USD/CAD Threatening Break Of Support

USD/CAD turned lower on Tuesday on the back of a weaker dollar. The pair is seen attempting to break below support at 1.3588 which had previously held the exchange rate lower in November and December.

The US dollar index (DXY) broke below last week’s low at the European open and after a period of consolidation, extended lower to trade at a six-month low. DXY had reversed last week after retesting a broken rising trendline that originates from lows posted in May and is on track to post a third consecutive day of losses.
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CAD: Playing A Catch-Up With Oil; Scope For Further Squeeze S/T

BTMU FX Strategy Research maintains its forecasts for oil related currencies during this recent period of volatility which is still based on underlying assumption that the price of oil will gradually rise towards USD60/barrel in the year ahead.

"In these circumstances, we continue to see scope for catch up strength for the Canadian dollar and Norwegian krone which appear undervalued relative to the current price of oil," BTMU argues.

In particular, BTMU notes that short speculative CAD positions have been built up sharply in recent weeks which creates scope for an extended short squeeze in the near-term which could reinforce upward momentum for the loonie.
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Canadian March Manufacturing Sales Rise 1.0%, Orders Increase

Canadian manufacturing sales rose 1.0% for March which was in line with consensus forecasts. The February data was revised to show a 0.6% decline compared with the 0.2% drop reported originally, although there was still an 8.2% annual increase in sales.

In volume terms, sales rose 0.2% on the month to give a 3.6% annual gain.

USD/CAD Recovery Capped At Broken Trendline Resistance

USD/CAD has held above important support in the week thus far but a recovery attempt was short-lived as the pair turned lower after retesting a broken rising trendline. The currency pair is seen retreating back to support while oil prices continue to hover near a major resistance confluence.

WTI crude oil prices have mostly been trading within a range this week after an early week push higher to resistance. The hurdle to the upside comes from a 200-period daily moving average as well as a rising channel that had previously encompassed price action for nine months ahead of the downside break at the start of the month. The confluence of resistance is found near a horizontal level at $49.37 which has held oil prices lower on three attempts this week.
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USD/CAD Drops Lower As Oil Prices Extend Gains

A break higher in oil prices has resulted in a drop below support in USD/CAD which is seen trading lower by half a percent shortly after the European close.

WTI crude oil prices (USOIL) have been facing a confluence of resistance for most of the week as the 200-period daily moving average came into play this week and as prices had been retesting a broken channel that had contained price action for nine months.

USD/CAD Recovers To Erase Early Day Losses

After pushing to fresh weekly lows in early European trading, USD/CAD reversed higher to turn back to positive territory. The pair is on track to post a bullish hammer reversal candle on a daily chart, although risk events on Wednesday will be a big driver for the pair.

Both the Bank of Canada and the Federal Reserve will reveal their latest stance on Wednesday as the BoC holds their monthly monetary policy meeting while the Fed will release minutes from their April meeting. The weekly EIA oil inventories report will also be released, adding further risk for the pair.

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Bank of Canada holds rates at 0.50%, as expected

All things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present
Had previously said it "judges that the current stance of monetary policy is still appropriate"
Inflation is broadly in line with the Bank's projection
BOC's 3 measures of core inflation remain below two per cent
Wage growth is still subdued
Global economy continues to gain traction
Uncertainties from April statement remain
Recent economic data have been encouraging, including indicators of business investment.
Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions
Very strong growth in the first quarter will be followed by some moderation in the second quarter

USD/CAD Rises From Channel Support As Oil Prices Tumble

USD/CAD turned higher after testing support from the lower line of a rising channel, boosted by a sharp drop in oil prices.

OPEC and non-members agreed to extend productions cuts by nine months which was largely expected. Investors were disappointed that the agreement did not extend beyond the expected time period or that cuts were not deepened.
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