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USD/CAD shoots higher to 1.4136 as oil dives into negative territory, literally negative

  • USD/CAD capped following spike to the upside on oil price shock.
  • WTI May contract falls into negative territory ahead of expiry 21st April.

USD/CAD is currently trading at 1.4119 at the time of writing, +0.86% having travelled from a low of $1.4014 to a high of 1.4136. The price of the front-month oil contract just marked history, plunging about 300% to settle negative $37.63 a barrel.

The price of the Canadian dollar is positively correlated to oil prices and the US dollar is still regarded as the FX space's go-to currency at times of volatility and uncertainty. That is a bullish combination for USD/CAD.

Also, with the Bank of Canada extending its asset purchase program to provincial and corporate bonds, the Canadian dollar is unlikely to emerge from the bear's grip any time soon. In the same vein, Governor Stephen Poloz recently indicated that the BoC still has 'room to do more', and so long as the global economy continues to deteriorate pertaining to lock down extensions, the chances of this happening appear quite significant.

Oil to say low for foreseeable future weighing on CAD

The May futures contract expires in the 21st April, tomorrow, so this is partly the reason why there was such a drop in the price as traders bailout ahead of expiry in low trading volumes. However, the extreme oversupply situation means that oil prices are unlikely to rebound before the third quarter of this year which is going to weigh heavily on the oil centred Canadian economy and currency. 

For economic data this week,  headline Consumer Price Index is forecasted to slip by 1.1pp in March to 1.1% YoY by analysts at TD Securities who cite "a sharp drop in gasoline is compounded by base-effects, with a slight offset from higher food prices. This will put inflation on track to bottom-out near 0% by May and hold below 1% through Q3. Core CPI measures should edge lower by 0.2pp, leaving them near 1.8% on average.

USD/CAD levels

USD/CAD

Overview
Today last price1.4135
Today Daily Change0.0135
Today Daily Change %0.96
Today daily open1.4
 
Trends
Daily SMA201.4098
Daily SMA501.3774
Daily SMA1001.3457
Daily SMA2001.3339
 
Levels
Previous Daily High1.4118
Previous Daily Low1.3999
Previous Weekly High1.4182
Previous Weekly Low1.3856
Previous Monthly High1.4668
Previous Monthly Low1.3315
Daily Fibonacci 38.2%1.4045
Daily Fibonacci 61.8%1.4073
Daily Pivot Point S11.396
Daily Pivot Point S21.392
Daily Pivot Point S31.3842
Daily Pivot Point R11.4079
Daily Pivot Point R21.4158
Daily Pivot Point R31.4198

Author

Ross J Burland

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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