img CDN
img AUS
img NZ
img US
Call us now: 1.844.363.7297
imgOnline Dealing Login

USD rally stalls, oil breaks $50

Published May 26, 2016
  • The U.S dollar’s three week rally against the majors has stalled this morning
  • The USD index is 0.6% lower since yesterday after having reached its best levels since late March earlier this week
  • Oil prices have climbed to fresh 2016 highs overnight, likely contributing to the USD’s woes and overshadowing the Fed’s recent spat of hawkish rhetoric
  • Brent and WTI crude prices have broken above the $50 mark for the first time since November 2015
  • Yesterday’s inventory data from the EIA showed that stockpiles of crude in the U.S fell by 4.2M barrels, compared with expectations for a 2.4M barrel drop
  • Production in the U.S has declined for 11 consecutive weeks and now stands at 8.8M barrels per day compared with just over 10m last year…
  • …there are also over 1M barrels of oil sands production still off line in Northern Alberta due to wild fires
  • This trend of lower than production should keep prices buoyant and the USD trading with an offered tone
  • Yesterday’s BoC decision caught the market slightly off guard – rates were held at 0.5% but the accompanying statement was not as dovish as expected given the recent run of poor economic data, and thus the neutral tone from the BoC has supported the Loonie
  • Finally, U.S data was quite strong this morning with durable goods order coming in at +3.4%, smashing expectations for a 0.3% print
  • Jobless claims were also lower at 268K versus 275k expected

USDCAD Technical Glance
USDCAD is testing very important levels of support this morning near the 21 Day Moving Average (DMA) at 1.2891.  Above this level keeps the USD bull run intact, while a close below it will likely indicate a pause in the current trend and perhaps a deeper pullback.  Yield spreads still favour the USD (white).