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Loonie, Oil Lower to Start the Week

Published July 25, 2016
  • Markets are off to a quiet start to the week with Asian and European equities drifted sideways to minor gains and US and Canadian exchanges set to open flat
  • Over the weekend the ever exciting G20 group of ministers vowed to use "all policy tools available" to support global growth – a vague reference to an the on-going period of low interest rates and fiscal investment seen across Western countries of late
  • There was little impact however to the industrial commodity block as oil, copper and zinc are lower to start the week as is the broad CRB Commodity Index as well as the Baltic Dry Freight Index, all signs that there is little pent up demand for the world's raw goods at the moment
  • USDCAD broke out of a months long sideways trading pattern on Friday despite strong Canadian Retail Sales and Inflation readings
  • Spot is now threatening a move back into the 1.3200's and if we can hold here the medium term targets of this move would be the 200 DMA at 1.3313 and then the 50% retrace of the Feb-May drop which is in the mid 1.3500's   
  • Weaker oil prices and excellent data south of the border seem to be the catalyst for the move higher in USDCAD
  • Oil broke below price support at the 100 day moving average on Friday and more losses seem probable as the glut of gasoline and diesel despite summer driving season should keep refinery demand subdued into autumn maintenance season
  • There are no domestic data from the US or Canada today but the rest of the week is a heavy one for the US and a rather light one for Canada
  • Look for market moving potential on Tuesday's US Consumer Confidence and New Home Sales, and of course Wednesday' Federal Reserve Interest Rate decision
  • Friday brings Canadian GDP for May and Producer Prices for June 

Charts:  USDCAD breaks above topside resistance as WTI Oil breaks lower.