WTI Crude Continues To Plummet, USD/CAD Rallies
It has been a muted open on Wall Street, with both indices trading near flat. July WTI futures are trading in the red once again, falling over 70 cents, under the $64.50 handle. Sellers can’t seem to get enough of this market. Going back to late-May, nine of the last eleven sessions have closed in the red for WTI crude futures. The action has facilitated a drop of over $8.00 per barrel.
The big loser in today’s crude oil sell-off has been the Canadian dollar. The USD/CAD is up 93 pips on the session, a substantial loss for the CAD against the Greenback. The Loonie is likely to face more pressure with this week’s crude oil inventory cycle.
USD/CAD Technicals
From a long-term perspective, the USD/CAD is in a rotational phase. Price is trading near the 50% retracement of 2017’s range, with this year’s high of 1.3124 just beneath the 62% retracement. If we continue to see falling crude, expect these levels to be tested once again.
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Overview: At press time, WTI crude is pushing intraday lows and the USD/CAD is rallying toward resistance at the Swing High (1.3046). Normally, shorting near such a level would be a solid play. However, in the wake of explosive selling in WTI crude, it is best to wait until at least the API stocks report is out to get involved with the Loonie.
The optimal scenario for the USD/CAD is a continued bullish break toward 2018’s high (1.3124). A test of this level just under the 62% retracement of 2017’s range (1.3130) will produce premium trade location to the short.
With a bit of luck, this trade will set up by week’s end.
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