- The loonie catches below the 1.35 level, eyes on the 200-DMA.
- Oil, in particular, supports a supply in the loonie as savings return online after the COVID-19 blockages.
The USD / CAD is currently trading at 1.3488 after falling from a high of 1.3572 to a low of 1.3480 after an optimistic Bank of Canada.
The markets are again positive mid-week despite a pause for reflection before the opening of North America, the futures registering moderate losses and a stronger American dollar. However, we saw a new low in the greenback that dropped to 97.19 levels in mid-March.
Investors continue to encourage signs that the charts are slowly starting to turn with new case interruptions or subsequent secondary blockages, so far. The markets are also convinced that central banks and governments are there to support the global economy. Sentiment has also helped support the commodity markets and the CRB is now back in the grip 134. Oil, in particular, is supporting a supply in the loonie.
“We are witnessing a major real-time rebalancing, as energy demand continues to normalize,” said analysts at TD S Securities. a combination of travel while social distancing is loosening in developed countries and large-scale cuts in OPEC + are helping to accelerate the rebalancing of the market.
The WTI is currently trading at $ 36.79 and completed a 78.6% Fibonacci from the April 20 low, an advantage for the Canadian economy. The production and delivery of petroleum products, natural gas and electricity in Canada contribute approximately 10% to Canada’s gross domestic product (GDP), or $ 1.8 trillion.
Bank of Canada is relatively optimistic
The Bank of Canada was relatively optimistic, leaving rates unchanged at 0.25% and reaffirming the ELP. The Bank noted that the COVID impact has peaked, highlighted the role of decisive and targeted fiscal measures, and revised its short-term estimates to show a less severe contraction in Q2. Gradual reduction is now on the agenda of its short-term funding programs.
Above all, the last paragraph of the declaration has been modified. “There is now a tendency to support the inflation target, rather than reducing the containment period, in line with his claim that the maximum impact is behind us and the functioning of the market has improved,” explained analysts at TD Securities.
USD / USD levels
The loonie is testing below the psychological level of 1.35 and the moving average support area of 1.3460 / 200 days will be closely monitored. We have seen a dip of 1.3480 so far.
“We believe this will continue, as there is a lot of good news about the price of CAD. But until there is a clear shift in fundamentals, CAD may be a reluctant participant in this story “said TD analysts. Explanation of titles.