Declining oil prices may weaken the Canadian dollar
In this review, we suggest considering the personal composite instrument (PCI) CAD_Index – “CAD Currency Index”. It falls when the Canadian dollar weakens against the other major currencies. Is there a possibility for CAD_Index prices to decrease?
Hydrocarbons account for about a quarter of Canadian exports. The decrease in world oil prices worsens economic indicators of Canada and negatively affects the Canadian dollar. Additional negative factors were: the next suspension of the construction of the Keystone XL pipeline, which is supposed to transport Canadian heavy crude oil for refining in the USA, as well as a slowdown in the development of industrial production in China. On November 23, important data on inflation for October will be published in Canada. They may affect the decision of the Bank of Canada to keep or raise the rate at its next meeting on December 5.
On the daily timeframe, CAD_Index: D1 has breached down the support line of the rising trend. The further price decrease is possible in case of the further reduction in oil prices and preservation of the rate of the Bank of Canada.
Summary of technical analysis
Position Sell
Sell stop Below 0.8
Stop loss Above 0.813
In this review, we suggest considering the personal composite instrument (PCI) CAD_Index – “CAD Currency Index”. It falls when the Canadian dollar weakens against the other major currencies. Is there a possibility for CAD_Index prices to decrease?
Hydrocarbons account for about a quarter of Canadian exports. The decrease in world oil prices worsens economic indicators of Canada and negatively affects the Canadian dollar. Additional negative factors were: the next suspension of the construction of the Keystone XL pipeline, which is supposed to transport Canadian heavy crude oil for refining in the USA, as well as a slowdown in the development of industrial production in China. On November 23, important data on inflation for October will be published in Canada. They may affect the decision of the Bank of Canada to keep or raise the rate at its next meeting on December 5.
On the daily timeframe, CAD_Index: D1 has breached down the support line of the rising trend. The further price decrease is possible in case of the further reduction in oil prices and preservation of the rate of the Bank of Canada.
- The Parabolic indicator gives a bearish signal.
- The Bollinger bands have narrowed, which indicates low volatility. Both bands are titled downwards.
- The RSI indicator is below 50. No divergence.
- The MACD indicator gives a bearish signal.
Summary of technical analysis
Position Sell
Sell stop Below 0.8
Stop loss Above 0.813