- CAD bulls continue to feel unloved
- Dollar strength relies on “patient” being dropped
- Investors look to crude for support
- Through $1.28 market eyes up $1.3000
The loonie continues to be battered about, similar to its peers, against the USD. In early Wednesday trading, the CAD has managed to print new monthly lows outright (CAD$1.2782), mostly on the back of the USD been driven higher by expectations that the Fed will drop the word “patient” from its policy statement next week (March 17-18).
‘Trend remains your friend’
With USD/CAD being dragged and pushed higher by rate differentials has most CAD bulls under pressure and fearing a break to new yearly highs. The loonie, similar to other commodity and rate sensitive currencies, currently has few natural fundamental supporters. Excluding rate differentials, for any dollar bull, the short-term medium support for the currency couple will most likely come from either crude prices coming under renewed sustainable pressure or further deterioration in Canada economic data.
Presently, the USD’s strength can only make life harder for oil; even as inventory builds take a breather. WTI crude has dipped below $47.50 in the wake of today’s DoE’s weekly inventory report (+4.5m barrels, as expected), while front month Brent contract have been trading as low as $56.00 earlier today.
This week’s key event risk is Friday’s February jobs data. With a -5k fall in employment expected, and the jobless unemployment rate forecasted to rise to +6.7% from +6.6%, should be capable of squeezing the weaker CAD bulls out of their positions. For the dollar supporters, once they are able to take $1.2800 out (January 30 highs) they will feel confident in setting their sights on the medium term target, the $1.3000 handle.