USD/CAD soared on muted Canadian economic data and oil glut
- CAD under pressure on muted Canadian economic data & dovish stance by BOC last week.
- CAD is being undermined today by lower oil prices.
USD/CAD is now trading around 1.2638, in late Tuesday NY session, up by 0.6% amid broader strength in greenback coupled with muted Canadian economic data and news on a Canadian oil glut.
On Tuesday, Canadian wholesales trade for December flashed as soft at -0.5% against an estimate of +0.4%; prior: +0.3%.
Apart from general strength in the US dollar, CAD is also under stress for some structural reasons like the Canadian oil glut, NAFTA jitters, softer commodity prices on higher USD, renewed worries about Canadian housing and a muted Canadian job report for January after strong months in December and November 2017.
Canadian crude oil is now selling at a steep discount of almost 45% to US oil refineries. On the other side, the US has now plenty of its own shell oil and does not require Canadian oil at all. Thus Canada is almost forced to sell its oil to the US at a very steep discount, which is affecting its economy and the currency. The CAD is now underperforming against all the other G-10 currencies.
Technically, for USD/CAD, the area of 1.2447 is now a vital support and it needs to sustain above 1.2590 for 1.2638-1.2653 and 1.2681-1.2710 zones in the coming days; sustaining below 1.2447, the area of 1.2249 may be visible in the near term.
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