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Weak Crude Oil Could Drive Down Canadian Exports

By:   James Hyerczyk
  • 20-07-2008
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Weekly Recap

The USD/CAD received upside support most of the week as the sharp break in crude oil put pressure on the Canadian Dollar.

Fundamentals

Although lower energy prices are supposed to be beneficial to an economy, in this case, they will adversely affect Canadian exports.

Overall, the Canadian economy is still stronger than the U.S. economy, but a shored-up financial sector, lower oil prices and a bullish stock market may draw funds out of Canada and into the United States.

Technicals

The May to June range is .9818 to 1.0323.  Based on this formation, the pair found support after a break back to a key retracement zone at 1.0070 to 1.0010.

The actual break exceeded the downside objective at .9974, putting the market in an oversold position.

After regaining par, the market closed firm, but could not form a clean reversal bottom.

Regaining 1.0070 early next week will put this pair in a strong position to rally to 1.0149 to 1.0190.


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Next Analysis: Assets May be Shifting from Aussie into U.S. Dollar
Content Provided by:
James Hyerczyk

James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association.

Mr. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor.


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