At the time I write this signal. the tension in Iraq is still not released. ISIS troops took Mosul, and are threating Baghdad : The capital of Iraq.
The main reason why Crude Oil escalated to 107 last week is tension in Iraq. As we know, Iraq is a big oil export nation, and the tension disrupted oil export of Iraq.
But why is it so important ? Clearly geopolitical insecurities in Middle East : Iraq and Syria impact on US Stock. After rising to 1955, SPX fell to 1924.
Canada is an oil export nation too, so the sharp jump of Crude Oil clearly affects on Loonie.
Actually, many traders still hold the viewpoint that the bias of trading USDCAD is BUY USD vs CAD. However, we saw a fact that after rising to 1.12, USDCAD gradually fell to 1.08 despite of good economy of US and negative data from Canada even dovish bias of BOC .
Theoretically, If Oil rises, USDCAD falls and vice versa. Apply in this situation, I see there is little change for CAD rallies. We should change the bias, it means we should SHORT USD vs CAD.
The tension in Iraq cannot be solved soon, so Oil would continue rising, and it would weight on USD vs CAD.
There is no major support for USDCAD until 1.07 level.
I will SHORT USDCAD to 1.07 level, stop loss 1.0933