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Currency: Wednesday, February 24

Posted on: February 24, 2016

Well, took a few days off and see CAD continues to range trade, reacting to various crude headlines and last night the driver appears to be comments from the Saudi oil Minister that they did not see the need for production cuts. Combined with a larger than expected inventory build revealed yesterday with the weekly API release, and the market has gone full defensive since early London trading. It’s hard to say if this has impacted CAD much if at all, but the GBP keeps taking a beating as nervousness grows over the UK leaving the EU. Poor David Cameron, he spent all the time browbeating Brussels into special concessions, only to have the Mayor of London, a member of his own party, torpedo him the next day by declaring for the exit side.

As I said, it’s hard to put any direct correlation to recent CAD weakness, but I do think the threat of UK separation has created new uncertainties which in turn is elevating vols across most of the majors. In this environment, especially with equities coming off again, it’s hard to see CAD continuing its recent rally. Two tries to break below 1.3650 in one week failed and that will encourage the technical players to target 1.4100 again. For today, the main event for CAD will be EIA inventory data out at 8:30 am. If it confirms the ADP data from yesterday, crude may well drop back below $30.00/barrel again, and thus CAD may weaken further.

I am small long USD currently (1.3845) and will look to add on dips below 1.3825. At this point, I see little danger of a sustained CAD strengthening move and so would only stop out below 1.3640.

  • Tuesday’s Inter-bank range: 1.3712 – 1.3821
  • Asia overnight Inter-bank range: 1.3783 – 1.3815
  • London overnight Inter-bank range: 1.3772 – 1.3855


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