USD/CAD looks to extend gains near 1.3330

The Canadian Dollar remains on a weaker note vs. its American neighbour on Monday, now pushing USD/CAD to the area of daily highs near 1.3330.

USD/CAD firmer as oil drops

CAD is deriving extra weakness from the softer tone in crude oil price, with the barrel of West Texas Intermediate down nearly 2% following a pick up in the US drilling activity, as reported by Baker Hughes on Friday.

In the meantime, at its recent meeting, the BoC kept its monetary status quo unchanged while cited that significant uncertainties linger over the US economy, particularly in regard with Trump’s administration.

Earlier today, President Trump has signed an executive order to renegotiate the NAFTA. Rumours around the news said that Canada could seek a unilateral agreement with the US, potentially leaving Mexico out.

Strategists at ING Bank said “…we continue to see the formation of three bearish CAD factors in the near term. The first is BoC/Fed policy divergence leading to a further widening of US-Canadian rates. Secondly, the retreat in the post-OPEC oil price spike as US supply glut concerns re-emerge. Thirdly, a  NAFTA trade renegotiation risk premium being priced into CAD as Trump takes office”.

USD/CAD significant levels

As of writing the pair is gaining 0.08% at 1.3328 facing the next resistance at 1.3356 (55-day sma) followed by 1.3388 (high Jan.20) and finally 1.3463 (high Jan.3). On the flip side, a breach of 1.3268 (low Jan.23) would aim for 1.3250 (low Jan.19) and then 1.3116 (200-day sma).