EncoreFX’s daily market updates are written by our experienced and professional dealing team.
Oil and Loonie Once Again Under Pressure
Published July 26, 2016
Global oversupply in refined oil products coupled with ongoing economic uncertainties have once again put downward pressure on crude prices and the Canadian dollar
WTI front month is trading -1.34% lower to $42.55 a barrel this morning, its lowest levels since early May
Yesterday, WTI broke below key support at $44.24 (100 Day Moving Average); the move lower is now accelerating as traders pare back successful long bets, which paid handsomely from February to June
Short positions in crude increased by almost 36 million barrels in the week to July 19th compared with a mere 5 million new long positions, as traders positioned themselves for a momentum-driven drop in prices coupled with mounting concerns about weakening demand fundamentals
The renewed cycle of oil short selling comes after both Brent and WTI failed to sustain prices above $50 and as the glut of gasoline grows to record highs despite peak summer driving season
The Loonie has felt the pinch as well and has also broken to new multi month lows against the US dollar after a four-month period of consolidation
USDCAD is again testing into the mid 1.3200's this morning and looks set to take a run at key price resistance for the greenback at the 200 DMA just above 1.3300
The economic calendar is heavy today for the US with Home Prices, New Home Sales and Consumer Confidence hitting the tape so stay tuned as we may be in for another day of volatile trade in USDCAD
Charts: USDCAD may test the 200 DMA as WTI Oil breaks lower amid renewed short selling.