The weekly chart of USD/CAD is looking like a big breakout.
USDCAD weekly
Perhaps the biggest warning for the loonie today comes from the oil market. Crude is higher today after two days of declines but the IEA is warning about a surprise of 1 million barrels per day of global oil even if OPEC keeps its curbs in place. That’s based on forecasts for higher production from the US, Canada, Guyana and Argentina.
OPEC was bullish on demand at this time last year but proved far too optimistic. If they conclude that the oil market won’t come into balance by keeping barrels off the market, they may decide to fight for market share instead.
Domestically, Canada is in a tough spot as the housing market struggles, particularly in Ontario and BC. Some help could come from stronger Chinese stimulus but given that Chinese stocks are slightly lower again today and those risks may be tilted to the downside as well.