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    USD/CAD: The prices of oil and the Canadian dollar are declining on 15.03.2016

    Since the beginning of this week, the price of futures and spot-price of oil are declining amid expectations of agreement on freezing oil production.

    According to the agency Bloomberg, the meeting of the oil producing countries can be postponed till April.

    Meanwhile, oil minister of Iran has rejected possibility that his country will participate in such agreement at least until the production of oil in Iran will reach the level of 4 million barrels per day (the level before sanctions)

    This Wednesday the data on the US oil reserves will become known. It is expected that oil stock in the terminal “Cushing” will be close to the maximum highest level.

    The decline in the price of oil caused the decline of the other commodities and the price of the commodity currencies including the CAD.

    The main factor triggering this decline is the data on oversupply of oil in the world markets. This factor will continue to put pressure on the oil prices, which means that the price of oil will continue to decline and the pair USD/CAD will go up.

    Correlation between the CAD and oil price is approximately 92%.

    Since 20 January the pair USD/CAD has declining, which is caused by the rise in oil prices. However, the price of oil and the pair USD/CAD have reached the key levels. It is unlikely that oil prices will go up above the level of 41.50 despite oversupply of oil and the lack of progress in freezing oil production.

    The USA macro-economic data is more stable than that of Canada.

    Although earlier in March the Bank of Canada left interest rate unchanged, the bank is going to adhere to soft monetary policy in order to support economy of the country. It is possible that the bank will lower interest rate to the negative levels of -0.5% to reach the target inflation level.

    The decline in oil prices, difference in the monetary policies of the Central banks of Canada and the USA are the main factors which will affect movement direction in the pair USD/CAD. It is possible that the pair will be support at the current levels. In future uptrend in the pair can resume.


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