Higher oil prices and easing US dollar helped the loonie to strengthen to actual C$1.21 levels but next strengthening seems to be limited.
Prices of the West Texas Intermediate (WTI), as well as for Brent crude oil rose during last weeks on news hurting the global supply (decrease in oil rigs, Libya’s output down, hints about longer time for Iran to provide oil to global markets, etc), albeit the general oversupply still persists. This proved to be helpful for the loonie strengthening, reaching levels from January of this year.
Moreover, poor data from the first quarter helped to drag down the US dollar against its Canadian counterpart together with postponed rate-hike timing speculation. Now the September’s meeting seems to be the first real chance to see the monetary policy tightening, or even later.
From the fundamental point of view, we can expect the loonie to be correct back mostly with oil prices, as the currency tends to move strongly according to the black gold commodity.
From the technical point of view, we can see resistance level at C$1.2179 or later at $1.2642. Support as a target for bears remains at C$1.1943.
