Canada enjoys large natural resource reserves. As we have witnessed, Canada’s oil production could either lift or weigh on the economy, depending on the energy market. Additionally, as we hear more about droughts and dry weather conditions, Canada’s freshwater reserves, which account for 20% of the world’s freshwater, could come into play. Rising precious metals prices have also buoyed FXC this year.
Related: A Very Bullish Call for Oil ETFs
Some market observers, citing supply and demand dynamics, believe oil is rallying without strong fundamental cause. A case can be made that oil’s rally is defying still troubling supply dynamics and tepid demand. Elevated levels of production remain an issue for oil as well. OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
“Trading has oscillated from the support level of .7550 to the resistance level of .7900. While the 20-day Simple Moving Average (SMA) has crossed above the 50-day SMA, current trading shows the 50-day SMA as a short-term resistance point. The averages are close together, and a slight bullish move could easily push the Canadian Dollar above the 20-day SMA, a bullish sign. 14-day Relative Strength Index is a completely neutral at 50.30,” according to OptionsExpress.
CurrencyShares Canadian Dollar Trust
