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Loonie Ignores Rise in Oil as Presidential Debate Invites Risk Aversion

Published September 26, 2016
  • USDCAD is holding just under the 1.3200 handle to start the week, essentially unchanged from Friday's closing levels
  • The Loonie has ignored the 1% rise in oil prices which has likely come on the heels of rumours that a production deal among OPEC producers may still be possible
  • OPEC producing nations are in Algeria today for a three-day meeting that wraps up on September 28th
  • Saudi Arabia has offered to reduce production if Iran caps its output this year, although such an agreement remains unlikely considering that Iran is still trying to regain its post-sanction share of the oil market
  • Will this meeting be a classic example of "buy the rumour sell the fact"?
  • Larger concerns for USDCAD traders come to the fore this evening with the first of three US presidential debates 
  • Donald Trump's candidacy has uncovered strong protectionist overtones across the electorate and these concerns have crossed into the Democratic platform as well
  • Both candidates have talked about altering NAFTA and have also come out against the Trans-Pacific Partnership that would be of great benefit to Canada
  • US 2-year yields are slightly lower on the day and the S&P500 is set to open about 0.5% lower as markets don't seem to be willing to take on new risks ahead of tonight's debate 
  • There is a dearth of Canadian data until Friday's GDP figures so it will be a US dollar and Oil driven story for USDCAD until then

Charts: (1) USDCAD key resistance 1.3239/1.3255 with support 1.3000 and 1.2825/75. (2) Fed Rate Hike Probability. (3) Economic Calendar.