For the last 48 hours USDCAD has been stuck in a pretty tight range chopping around the 1.1950 level and it feels like it’s just preparing itself for a charge through the psychologically important 1.20 barrier. So when it does bust through where is the next stop on the line? Clearly right now price action is determined by where oil is going so let’s look at long term support for wti. Only yesterday we had the UAE energy minister confirming that there will be no change in OPEC policy and no reduction in production, and so the falling knife that is the price of oil has further to go. Looking at the weekly chart of oil going back 15 years we are now getting close to the mid 30 lows seen during the financial crisis of 2008, which would be a natural level of support. So what does a $35 barrel of oil mean for the Loonie……..the current correlation would suggest a level of 1.22, which also happens to be a longer term resistance point.
Weekly Oil going back 15 years