USD/CAD rallies to 76.8% summer 2017 - 2018 low Fibo on dovish BoC

USD/CAD has been found a fresh lease of life and ha rallied to a high of 1.3382 following a dovish statement from the BoC while the greenback takes up its place on the peddle stool 97 handle, (+.20%).
Bank of Canada leaves rates unchanged at 1.75%, as expected and the statement clears out Jan rate hike expectations bids in the Loonie.

Ross J Burland FXStreet

The BoC was a disappointment on Wednesday and has left the Loonie out to dry as investors pull their bids following a dovish statement. Traders picked up on the line about more 'room for non-inflationary growth' and have taken on board the central banks concerns over the price of oil. Canada has a budget price for Canadian oil and at these levels, it makes that business non-profitable.

Oil prices impacting economic outlook and inflation

In recent news, Oilsands producer Canadian Natural Resources has been reported to cut $1 billion from its 2019 budget due to low oil price, setting its 2019 capital budget at $1-billion less than its "normalized" range. The company says it will ramp up spending if heavily discounted oil prices in Western Canada rebound. Saskatchewan Premier Scott Moe and Alberta Premier Rachel Notley are calling on Prime Minister Justin Trudeau to address the "crisis facing the energy industry" at this week's first ministers meeting. "Our country is losing $80 million a day because we cannot get tide water access and world prices for Alberta's oil and gas," they say.

USD/CAD levels

"USD/CAD has fully retraced its post-G20 decline and closed the weekend gap with a push back into the ascending channel from early October, analysts at Scotiabank noted.

That channel floor offers near-term support around 1.3260 and we would anticipate additional support below the first (23.6%) retracement of the October-November rally around 1.3220. With this move, the price is now resisted by the summer highs at this level, which is the 76.8% Fibo of the 2017 highs to 2018 lows, and a break of which opens a run to the 2017 summer highs at 1.3550.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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