ONLINE FOREX BROKER
2020-08-27 • Updated
USD/CAD reached levels unseen since the beginning of the year. ING considers the pair may fall further, but Bank of America warned that it may hit its bottom and reverse in the long run.
As you may know, the Canadian dollar is positively correlated with oil prices. When the oil market is on the rise, the loonie is in high demand, too. Yesterday, WTI oil’s price surged to the levels unseen since early March. According to Bloomberg, the hurricane in Mexico forced oil refineries to shut down and stop oil production. In addition, ING points to Russian oil cuts to the lowest levels in almost ten years. The leap of oil prices should push the CAD upper. Watch out today’s report of US crude oil inventories at 17:30 MT time! They may have an impact on the oil market.
Bank of America is confident that the recent euphoria about the global recovery soon is gone, and investors have become more realistic. They weigh more on possible risks and slower economic rebound. They forecast that USD/CAD may return to 1.3700 during this quarter and to 1.400 at the end of the year.
Unlike Bank of America, ING is quite confident that the pair will keep declining and may reach the area of 1.2500-1.2600 in the first half of 2021. Besides, they emphasize that the Canadian dollar has been performing worse than other currencies of G10. It has happened because of the close dependence from the US economy. Investors were worried about that amid the second virus wave. However now, when the infections curve is declining, those doubts are waning. Therefore, the Canadian dollar has all chances to catch up the lost ground.
USD/CAD has been trading in the descending channel since late June. ING believes there is more room for a further fall of the loonie. Bank of America allows that the consolidation may continue until the pair reaches the strong support of 1.3000, which should be the point of reverse.
If the price breaks down the support of the low of January 23 at 1.3120, it will fall deeper to the next support of 1.3045. Otherwise, the move above the recent high of 1.3215 will drive the price to the next resistance of 1.3300.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
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