Crude oil prices and Canadian dollar, preparing for a reverse trade! ~Strategy for November 14~

◎Strategies and Points of Focus

Developments to gauge the strength of the Canadian dollar

The Canadian dollar and crude oil prices are highly correlated, and when crude oil prices fall, the Canadian dollar is often sold off as well.

WTI crude oil price has fallen for 12 consecutive days,by more than 20 dollars.

Under normal circumstances, the Canadian dollar would be expected to fall sharply in proportion, but it has only been sold off moderately.

Personally, I think this situation is an “anti-trend trade,” and I feel it presents a chance.

WTI crude oil price weekly chart

WTI crude oil price daily chart (reduced)

WTI crude oil price daily chart (expanded)

Canada’s major industry iscrude oil price decline

→ slowdown of the Canadian economy

→ expectations of a Bank of Canada rate hike retreat

→Canadian dollar selling

In this way, a scenario where the Canadian dollar is sold is the usual situation. However, it has not fallen as much as expected.

USD/CAD daily chart

CAD/JPY daily chart

Against the dollar, the Canadian dollar is slightly being sold.

Against the yen, the Canadian dollar is slightly being bought.

With oil prices falling,if the decline has reached this extentthe Canadian dollar could continue to weaken on its own.

Nevertheless, the Canadian dollar isn’t selling off much becauseother factors are strong, and the marketdoesn’t want to sell the Canadian dollar, or wants to buy it. I think it could be both!?

In such a situation,when oil prices rebound or surgethe Canadian dollar often surges together.

Therefore,the current state is a waiting trigger for a rapid rise in the Canadian dollar!I view it as a chance.

How long can the Canadian dollar endure?

How long will crude oil prices continue to fall?

I want to monitor and be prepared.

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