Oil price surge swamps USDCAD
Summary: The Canadian dollar soared in tandem with WTI crude oil prices following the release of today's EIA inventories data.
Shrinking inventories combined with global production declines and somewhat positive developments in the US/China trade talks are underpinning prices.
The USDCAD uptrend since October is intact while prices are above 1.3150 but prices are in correction mode today. The post- March 5 rally following the dovish Bank of Canada policy statement and outlook ran out of gas at 1.3465, making triple-top resistance. The subsequent retreat below support at 1.3380 and again at 1.3350 targets the 100-day moving average at 1.3290.
US dollar losses were not just confined to the Canadian dollar. The greenback is modestly lower against the major G10 currencies except for the Japanese yen and New Zealand dollar, which are unchanged after today’s US economic data improved risk sentiment.
Durable Goods Orders rose 0.4% in January, well above the -0.5% forecast, making the third consecutive gain for this data point. Construction spending was better than expected, rising 1.3% compared to 0.4% forecast and Producer Prices were a tad lower than estimated. Together, the data alleviates recession concerns while not giving any ammunition for higher interest rates.
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