Oil disruptions in Canada, Venezuela, Libya, and continued sanctions against Iran have left oil prices at three and half year highs. West Texas Intermediate touched $75 USD a barrel, however, prospects of oil inventory buildups in the U.S. then sent prices lower on the day.
The USDCAD is basically unchanged as trading will be quiet going into tomorrow’s July 4th holiday, markets are now betting that the Bank of Canada will hike rates next week and will wait to see if the BoC will give any indications of further hikes as well.
Expect a narrow range today and tomorrow.
USDCAD 1.3135, 1.3100, 1.3090 1.3185, 1.3200, 1.3238
USD-CAD has steadied after tumbling sharply late last week, to the lower 1.31s, falling from a one-year high that was pegged at 1.3387 last Wednesday. BoC Governor Poloz showed himself to be in want of further rate hikes in a speech and Q&A session mid last week. The big surge in oil prices of late has also been a prop for the Canadian dollar. USD-CAD has resistance 1.3210-11.
EUR-USD settled around the 1.1650 mark after trading on both sides. The range so far today has remained within yesterday’s range. The pair is over a big figure from last week’s lows, having been underpinned by the passing of potential political uncertainty in Germany and after EU members last week made an agreement on immigration (to shore up external borders and create screening centres for migrants). This reduced the what could be called the existential-threat discount built into the euro, as the deal should placate the Italian populist government and broader Eurosceptic, populist movements across the region. Bigger picture, EUR-USD remains in broadly consolidative phase after a downtrend from mid-April levels above 1.2400. The range over this phase has been 1.1508 to 1.1851. More of the same looks likely for now.