Oil price fall, Bank of Canada’s (BoC) monetary policy and strong dollar are three major factors holding loonie at 2009 lows. Current oil price drop is expected to hit North American economy mostly during H1 2015, as BoC’s Mendes confirmed on Thursday and country expects stabilisation in 2016.
As the Energy Information Administration cut global demand and increased supply outlook for this year, commodity fell back and loonie came under pressure again. US dollar’s uptrend will be now tested during Federal Open Market Committee meeting next week due to any hints of rate-hike timing, while general belief is still for June.
Focus of market will turn now to labor data, coming at 12:30pm GMT. Traders tend to be sensitive on unemployment rate change and net employment change, albeit not supported always by other data from Statistics Canada (like participation rate). If we see an increase in unemployment to 6.7% or higher, or drop in net employment change, we may expect further losses on Canadian dollar even above slight resistance at C$1.2764. Next level, albeit weaker one, could be seen at C$1.2838 from 2009. In the case of optimistic data, we will watch C$1.2676 and C$1.2610. Next strong support level is at C$1.2405, although not expected now to be reached.
