CAD strengthens as oil prices increase

As a commodity currency, the CAD continued to strengthen after the recent increases in oil prices. The looney could be further supported as increased demand may arise due to the current weather conditions in the US. However it should be mentioned that the currency was supported throughout the past two weeks also by good financial data releases from Canada. The Canadian dollar could remain on the headlines in the upcoming weeks as more financial data is due and the winter weather conditions could support oil prices even further.

USD/CAD continued to drop throughout last week marking a downward trend line and heading towards the 1.2520 support line. We expect the market to remain in a bearish mood for the short term and should that be the case we could see the pair breaking the 1.2520 support line and aim for the 1.2450 support level. Should the second support level be breached we could see the pair aiming for the 1.2350 level. On the other hand should the bulls take the driver’s seat we could see the pair testing the 1.2650 resistance level.

As for today’s other economic data, the preliminary HICP rate for Germany is to be released and is expected to slow down somewhat. As the figure is preliminary and the political news regarding the EUR seem to be of neutral to negative tone the market could move somewhat.