The USDCAD ebbed at seven-week lows under 1.3120, in what is now the tenth down day out of the last 13 sessions. The Canadian dollar has been underpinned today by a 5% surge in oil prices today following the weekend meeting of OPEC and non-cartel oil producing nations, where strong commitments were made to implementing the agreed plan to trim production. Non-OPEC producers, led by Russia, agreed to a nearly 600k bpd reduction, with Moscow agreeing to a 300k bpd cut. Saudi Arabia meanwhile, hinted that it may be willing to reduce its output further. It remains to be seen if producers adhere to their agreement to curb global over supply, though even if successful, higher prices will bring U.S. shale production back on line quickly, offsetting cuts announced over the weekend.
Sustained gains in oil prices is a positive correlative for the Loonie, as it would boost Canada’s terms of trade. USDCAD’s 200-day moving average, at 1.3075, is now in the crosshairs with 1.3040 lower down. Trend resistance is at the 1.3175-3185 zone. Technically, there are signs of the pair being oversold (short term Stochastics, RSI and the moving averages are becoming over extended), so we might expect a retrace from here if the 200 DMA holds this week.
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