USD/CAD Active Following Oil Stocks
Shain Vernier • 2 min read
The crude oil market is always a key factor in USD/CAD exchange rate valuations. Conventional wisdom tells us that as the price of WTI crude rallies, the Canadian dollar gains ground vs the Greenback. This relationship is a staple of the USD/CAD pair and a key element of trading the Loonie.
Earlier today, the weekly crude oil inventory cycle was completed with the release of the EIA stocks report. Here is a look at this week’s figures:
Event Actual Previous
API Crude Oil Stocks -0.998M 2.514M
EIA Crude Oil Stocks 3.633M 1.263M
Today’s EIA statistics suggested that a strong build on supply was evident last week, in concert with the recent trend. This report is in line with expectations and has come as little surprise to energy traders. However, an early session run at $55.00 by March WTI crude fizzled upon the EIA release. At press time (1:30 PM EST), March WTI remains in bullish territory just above the $54.00 handle.
In a Live Market Update from yesterday, I issued a long trade recommendation from downside support in the USD/CAD. After taking some early heat, the trade turned out to be a winner and produced a nice 25 pip profit.
Overview: The USD/CAD has consolidated in a non-committal area between the daily Bollinger MP and SMA. This is a signal of trader indecision and is largely a product of today’s U.S. CPI and EIA releases. For the time being, currency players are content to wait for tomorrow’s session before taking a position in the Loonie.
Speaking of tomorrow, be ready for the U.S. Retail Sales report scheduled for the pre-market hours. Analysts are expecting the retail sector to perform well given a strong American economy and holiday season sales. If the numbers disappoint, the USD/CAD will be primed to break much lower by Thursday’s close.