Oil prices are trading just around $80.00 a barrel (NYMEX Crude). Eternal Market Analysis believes that Oil is trading very close to its projected 1st quarter high ($85.00). The expectation is for oil to decline below $75.00 in the coming weeks.
Early this morning, USD CAD was trading slightly north of 1.0550, Canadian data came out at 830EST with GDP matching estimates at 0.4% m/m, IPPI m/m beating estimates at 0.6% vs. -0.1% forecast . USD CAD dipped 130 pips to 1.0420 on the better than expected Canadian data and higher oil prices.
Support for USD CAD is strong between 1.0380 - 1.0400, also we expect a pull back in commodity currencies as the Greek uncertainty and renewed economic and political uncertainty in the UK continues to weigh on risk. In addition, we believe oil has made its high for the week this morning at $80.62 per barrel (NYMEX) and the inverse USD CAD to Oil correlation should result in USD CAD advancing (Canadian dollar weakness) in the coming days
Trade is to go long USD CAD here at 1.0420 with a 400 pip profit target of 1.0820. Stops should be placed at 1.0260 for a 160 pip risk.
BUY 2 Standard Lots of USD CAD @ 1.0420
Trade Tenure – 1 to 2 weeks
$ Value / pip = $9.5 per lot (X 2)
400 pips = $3,800 (Profit Potential) per lot (X 2)
160 pips = $1,520 (Risk) per lot (X 2)
We were stopped out of this trade for a loss of 160 pips in line with our risk plan. Crude Oil broke higher and Canadian Employment Data came out this morning showing an addition of a healthy 20,000 jobs against a +15,000 forecast. Unemployment also dropped from 8.3% to 8.2%
ReplyDeleteUSD CAD now trades below 1.02 for the first time this year on CAD strength and it is very likely that oil breaks to a new 2010 high later today especially if US Retail Sales Report beat forecast at 8:30EST.