USD / CAD: Oil is getting cheaper more_14/10/2015

Overview and Dynamics

The main influence on the short-term dynamics of the pair USD/CAD to the end of the week will provide the data coming from the US, as well as on the market of oil and commodities. Canada is a net exporter of oil to the world market and the oil sector is crucial for the country's economy. Rally growth in oil prices last week was replaced by the same strong decline since the beginning of the week. The price of Brent crude back below $ 50 a barrel. Concerns about oversupply of oil on the world market are saved, and the world's largest producers, such as Saudi Arabia, Iraq, do not reduce production, trying to protect their market share.

Last Tuesday, the Iranian Parliament approved an agreement on its nuclear program, signed in July with the representatives of the six world powers. After the lifting of sanctions, Iran will be able to increase oil production from the current 2.9 million barrels a day to 3.6 million barrels a day, as noted in the International Energy Agency (IEA). But Iran's oil reserves amount to at least 10% of the world.

An excess supply of oil is added the possible decline in demand in 2016. So IEA said Tuesday that the increase in global oil demand next year will drop to 1.2 million barrels a day.

The American Petroleum Institute (API) will publish today its assessment of the stocks in the US, and on Thursday at 18:00 (GMT + 3) US Department of Energy (EIA) will publish data on oil reserves in the last week of October.

Increase in inventories could trigger the pair USD / CAD, which strongly decreased since the beginning of the month and slightly behind the falling oil prices this week.

According to the latest data, the balance of foreign trade in Canada, according to the above statistics, last week, fell in August to -2.53 billion Canadian dollars compared to -0.82 billion in July. Also it fell and business activity in Canada (Ivey PMI 53.7 in September, compared with 58.0 in August). Against the background of declining GDP and a crisis in some sectors of the Canadian economy the Bank of Canada's monetary policy is aimed at further easing in contrast to the Fed's policy, which is still, most likely, will take a pause in interest rate rises in the United States. However, the final decision on the rate in the US is still pending, and the Fed's next meeting will be held on October 28.

But even if the Fed will not raise interest rates in the United States before the end of the year, the US economy looks much better than the Canadian economy. Against the background of the decline in oil prices USD / CAD pair at greater risk of medium-term strengthening than weakening. In this case, the current decline in the pair should be seen as a correction. When signs of completion of the correction necessary to revisit long positions on the pair USD / CAD.

The further key event of a fundamental nature concerning the dynamics of the pair USD / CAD could happen 21 October (meeting of the Bank of Canada) and 28 October (meeting of the Federal Reserve).

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Technical Analysis

Since the beginning of the month USD / CAD pair broke through 1.3140 important support level (EMA50 on the daily chart and Fibonacci level of 23.6% correction to growth from mid-June).

The pair committed to the key support level 1.2820 (50% Fibonacci level), which has been passed by in the middle of July on the decision of the Bank of Canada to lower its key interest rate in the country. This level also corresponds to the March highs and the end of a wave of growth from the level of 1.0650 the beginning of July 2014.

Near the level of 1.2820 and the support level passes EMA144 on the daily chart.

However, the pair found support at 1.2965 (38.2% Fibonacci level).

Oil prices are now falling, the pair USD / CAD, is - also against the backdrop of today's weakening US dollar. Given this dissonance is not excluded increase pair USD / CAD to yesterday's highs 1.3070. Further strengthening send the pair to the level of 1.3140 (23.6% Fibonacci level and EMA200, 144 4-chasvom chart).

OsMA and Stochastic indicators are deployed for purchases on the daily chart, though

4-hour chart - recommended sale.

Trading recommendations

Buy Limit 1.2965. Stop-Loss 1.2880. Take-Profit 1.3010, 1.3070, 1.3140

Buy Stop 1.3035. Stop Loss 1.2980. Take-Profit 1.3070, 1.3140

Sell ​​Stop 1.2910. Stop-Loss 1.3010. Take-Profit 1.2890, 1.2810

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