USD/CAD: Trading the US Crude Oil Inventories

US Crude Oil Inventories measures the change in the number of barrels held in inventory. The report is published each week. A reading which is higher than the market forecast is bullish for USD/CAD.

Here are all the details, and 5 possible outcomes for USD/CAD.

Published on Wednesday at 14:30 GMT.

Indicator Background

As Canada is a major oil producer, the Canadian dollar often mimics the movement of oil prices and is sensitive to US Crude Inventories. Traders should pay close attention to this indicator, as an unexpected reading can have a strong impact on the movement of USD/CAD.

Crude Inventories jumped 2.8 million last week, well above the estimate of 0.6 million. The surplus for the upcoming release is expected to shrink to 0.50 million.

Sentiments and levels

The Canadian dollar posted sharp losses last week and remains under pressure, close to the symbolic 1.30 level. However, the US NFP was very weak and it’s unclear whether the Fed will raise rates in June. So, the overall sentiment is neutral on USD/CAD towards this release.

Technical levels, from top to bottom: 1.3219, 1.3081, 1.2990, 1.29 and 1.2780 and 1.2646.

5 Scenarios

  1. Within expectations: 0.2M to 0.8M. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.9M to 1.4M: An unexpected higher reading can send the pair below above one resistance line.
  3. Well above expectations: Above 1.4M: A much higher surplus than expected would likely push USD/CAD higher, and a second resistance line might be broken as a result.
  4. Below expectations: -0.4M to 0.1M: A weaker reading than expected could cause the pair to break below one support level.
  5. Well below expectations: Below -0.4M. In this scenario, USD/CAD could break below a second support level.

For more on the loonie, see the USD/CAD..

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