As of 14:43 UTC, the USD remained stronger than the CAD as it opened at 1.3495 compared to the previous close at 1.3464 on Tuesday overnight session. USD/CAD advanced 0.25 percent with a session high of 1.35034 and a session low of 1.34813. If the upward momentum remains on the side of the greenback, the pair may find support at 1.34031 and resistance at 1.35185. A fall through would result in a new support at 1.33950 and to a new resistance at 1.35350.

The loonie had its all-time high against the US dollar on November 07, 2011 where it exchanged at $1.1030 while its all-time low was recorded on January 21, 2002 wherein it traded at $0.6179. Considering the movement of the band, the pair may enter a tight trading range, but the dominance of the US dollar will remain. USD/CAD will likely remain at 1.3500 level in the coming sessions.


No lift from the BOC

In the middle of lower and negative interest rates in the financial market, Bank of Canada has been maintaining its rate target at 1/2 percent while the bank rate is at 3/4 percent and the deposit rate stands at 1/4 percent. The bank acknowledges the financial risks in the market nowadays, although it believes that growth in the Canadian economy is expected to increase from 1.1 percent before the year ends and approximately 2.0 percent in the next two years.

In the general rule, higher interest rates increase the value of the Canadian dollar. Since the currency value is high, the demand also increases, thus more foreign investment. However, it seems the loonie couldn’t get the lift from the Bank especially now that the volatility in the market deepens due to the upcoming Fed meeting, post Brexit concerns and the uncertainties on the plan of newly elected US president.

Oil Prices Mixed

On the other hand, as a commodity currencies, the Canadian dollar moves along with the price of oil. However, oil futures fluctuate as well ahead of the OPEC meeting and as the global glut supply continue to haunt the industry. In-line with this, the demand for oil in the coming years couldn’t be assured. In the recent report of the International energy Agency, it showed that consumption of oil might not increase until 2040.

According to the representative of IEA, the difficulty of finding alternatives to oil in road freight, aviation and petrochemicals means that, up to 2040, the growth in these three sectors alone is greater than the growth in global oil demand. Clear enough; the birth of electric cars will also challenge the demand for the commodity. The agency shrugged off the current Paris Climate Change Agreement which aims to limit the rise of the global temperature whereas the governments are obliged to hold global warming to no more than 2C above pre-industrial levels – limiting the use of oil in the industrial sector.

In line with this, oil prices wobbled with Brent oil declining 1.02 percent to trade at $46.49 per barrel and crude oil losing 1.20 percent to $45.24 per barrel. The oil futures soared at the start of the week on renewed hopes of OPEC output deal but the gains were not sustained as the supply overpowered demand. In this case, the Canadian dollar could hardly find a support to achieve a bullish track.

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