CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

USD CAD plunges to 9 month low on crude oil surge

Article By: ,  Financial Analyst

USD/CAD dropped to a new 9-month low below 1.2800 support on Tuesday as crude oil prices surged dramatically due to renewed speculation that a deal to cap oil production levels among OPEC nations and Russia could plausibly be reached.

With a meeting of major oil producers scheduled for this weekend on April 17, the run-up to that meeting has been rife with constantly shifting conjecture over what the results of those negotiations might possibly be.

On one side, pessimistic observers have pointed to the likelihood that Iran will not participate in any deal due to its newly-obtained, post-sanction freedom to export its long-idle oil production, as well as Saudi Arabia’s previous assertion that no deal would take place if Iran was not a participant. Retaining and gaining market share is the common goal of all oil-producers, and a deal to freeze output would run counter to that goal. Furthermore, even if a deal did take place, there would still be the looming question as to whether a coordinated production cap at the recent near-record output levels would do much to alleviate the oversupply situation. On the other side, optimists have pointed to the fact that major OPEC producers and Russia are under immense pressure to reach a deal of some kind in order to help relieve plunging oil prices, which have caused severe economic problems across the oil-exporting world.

It was reported on Tuesday that prior to next Sunday’s meeting, Russia and Saudi Arabia had already agreed on a production cap and that the decision to do so is not contingent upon Iran’s participation. Whether this news is completely accurate or not remains to be seen, but the report was enough to further fuel crude oil’s recent rally and recovery.

The surge in oil prices prompted a corresponding rise for the oil-correlated Canadian dollar. This was manifested as a sharp plunge for USD/CAD below the noted 1.2800 support level. Since late January, the currency pair has slid in a steep downtrend from its long-term highs near 1.4700. In the process of this slide, USD/CAD has broken down below several major support factors, including 1.4000, 1.3600. 1.3400, and most recently, the 1.3000 psychological level. Additionally, the 50-day moving average has recently crossed below the 200-day moving average, suggesting strong bearish momentum. As USD/CAD has just reached down to break below the 1.2800 level on an intraday basis, the currency pair could now be targeting the next major downside support level around 1.2550, on any continuing oil rebound.

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024