Since the beginning of the year, the US dollar has depreciated against the Canadian dollar by 1%, to 1.2842. The phase of strengthening of the Canadian dollar began in April after the rally in the US dollar in March amid the collapse of stock indices and oil prices due to the coronavirus pandemic. The collapse of oil prices was influenced by the Covid-19 pandemic and a decrease in demand for energy resources. Since the beginning of the year, Brent crude oil has fallen in price by 22%, and after the collapse of oil quotations, the price recovered from a minimum of $ 15.90 by 229%, to $ 52.45. Against this background, the USDCAD pair fell from the reached maximum of 1.4667 by 13.5%, to 1.2688.
The Canadian dollar is expected to maintain its gains in the first half of next year and then decline towards the end of 2021 as markets begin to consider the possibility of a Fed rate hike. The discovery of a new, infectious strain of coronavirus has rekindled fears of an unsustainable recovery in global energy demand and put pressure on crude oil in December. The oil market has experienced news of a new virus.
From January 1, 2021, OPEC + will begin to gradually increase oil production, making production limitation quotas softer. The alliance’s decision should not have a noticeable impact on the oil market, as market participants have incorporated the increase in prices. The gradual exit of economies from the lockdown should positively affect oil demand. If the rise in oil prices continues, the “Canadian” will rise in price. The dynamics of the oil price for the “Canadian” is more important than any macro data for other countries.
The monthly chart clearly shows the “double top” pattern, which allows us to build a local “BB” channel. It is in the upstream “AA” channel. The lower border of the “BB” channel passes through 1.2045. By early August 2021, the USDCAD pair is expected to decline to 1.2045 (the minimum target for 2021), followed by a rebound to 1.2380.
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