The Canadian dollar is hanging tough even as WTI crude prices fall below $49 per barrel.
The latest producer price data from Canada showed a larger-than-expected drop but the market reaction was minimal. With commodity prices continuing to decline, not only is it likely to pressure Canadian inflation lower but it will also hurt the economy.
USDCAD 10 minute chart
There are talk of corporate sellers up at 1.18 but I think the topside eventually gives way to 1.19-1.20 in the next couple weeks but in the shorter term, it will be interesting to see how the loonie reacts if oil prices can bounce. I spoke with Reuters about the loonie yesterday.
