usdcad eyes multi year highs 1752072015
<p>Since mid-October, when it dipped to a low just above major 1.2800 support, USD/CAD has rebounded in nearly a month-long attempt to regain its multi-year […]</p>
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Since mid-October, when it dipped to a low just above major 1.2800 support, USD/CAD has rebounded in nearly a month-long attempt to regain its multi-year highs above 1.3400. This rise has been partly supported by a strong US dollar that has ridden a wave of renewed speculation over a Fed rate hike in December. It has also been supported by persistently weak crude oil prices that have weighed heavily on the energy-correlated Canadian dollar.
After last Friday’s surprisingly positive US non-farm payrolls report that added to anticipation of a December Fed rate hike, USD/CAD surged to a new one-month high above 1.3300. The present week has seen a modest pullback from that high, but both the fundamentals and technicals currently support further potential upside for the currency pair to continue the longstanding uptrend.
Further contributing to the weakness of the Canadian dollar, and the resulting strength of USD/CAD, has been the consistently depressed state of crude oil prices due to continuing oversupply issues now and for the foreseeable future. On Tuesday, the American Petroleum Institute reported a much larger than expected US inventory build last week of 6.3 million barrels, against prior expectations of only a 1 million barrel increase. This led to US crude oil extending its sharp decline of the past week. Official government data from the US Energy Information Administration is slated for Thursday.
Other important data this week that could affect USD/CAD’s attempt to extend its uptrend are Friday’s Core Retail Sales and Producer Price Index releases from the US. Positive numbers could further cement the prospects for a Fed rate hike next month, thereby potentially pushing the currency pair even higher.
With the combination of weak crude oil prices and a Fed-supported US dollar, USD/CAD could soon be poised to make a run at September’s 11-year high of 1.3456. Any further push above that high could then target the 1.3600 resistance level.
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