The USDCAD has finally broken out of the range after threatening to do so for many days over the last few weeks. It had been quite volatile over the last week or so on the back of the waxing and waning of the dollar strength and also the volatility in the oil prices and it looked as though the breakout was around the corner though the market did not know in which direction the breakout would be in.
USDCAD Breaks Out
The driver for this move seems to have come from the oil prices which are under pressure due to reports that say that the oil producers may not continue the production cut during 2018. This is not good news for the oil bulls and this has been affecting the CAD as well as the Canadian economy depends a lot on the oil prices. There has also been a good build in the inventory of oil in the US and this has only added to the pressure on oil and CAD as well. This has helped the USDCAD pair to move higher over the last 24 hours and been the seed for the breakout.
There has also been some strength seen in the dollar during this period as the tax reform bill seems to be moving on smoothly giving hope that it might soon get passed through the Senate and this would mark a major victory for Trump and his team and pave the way for the team to push through other bills as well. This has helped the dollar to push higher all across the board and this has seen the USDCAD break through the 1.2850 region as of this writing and move higher and this should mark a major shift to the upside.
Looking ahead to the rest of the day, we have the testimony from Yellen which is expected to lend more support to the dollar and we also have the oil inventory data from the US being released officially. We also have the OPEC meetings going on and the oil traders would be watching the outcome of this meeting very closely.
This article was originally posted on FX Empire
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