“One never finds a cathedral, a wave in a storm, a dancer’s leap in the air quite as high as one has been expecting.”
Marcel Proust, Within a Budding Grove
Commentary & Analysis
Like Oil Here? Then you like CAD here.
There are good reasons why oil prices go lower from here. I won’t attempt to re-hash them; others have done and adequate job at that already. But, based on my Chart View (aka pattern analysis) oil goes higher from here before going lower again. Guessing on a first target at the nice round $55 number. Take a look:
Oil Futures (WTI) 3-hour View: Targeting up to 55.73 on a standard extension of Wave (A) = (C)…key resistance is at 47.50 near term. Key support that changes the view is back at 42.52; I’m not a fan of black gold below there.
Using an oil guess to make a currency guess seems a bit odd—agreed. But if we are to play that guessing game the path oil leads to among the major pairs is the Canadian dollar. You can see clearly in the chart below oil and CAD-USD have been moving together:
Oil (red) vs. CAD-USD (black) Daily View: I guess that’s why they call CAD a commodity currency. You can see the tight correlation it has with oil prices.
Now to the dramatic conclusion: If you think oil is poised to rally, it makes sense to be long the Canadian dollar against the US dollar.