Upward momentum in crude prices will help the Canadian dollar rebound slightly, but the fundamentals still remain . In all reality, $47 per barrel will not rid the fundamentals within the energy space.
While keeping it all in perspective, the pop in crude prices is due to a series of headline factors as crude traded near levels not seen since the financial crisis.
First, the Energy Information Administration ( EIA ) reported that U.S. crude production declined in July. Falling a to a mere 9.3 million barrels, production is roughly 300,000 barrels from the peak. For the first half of 2015, an average of 9.4 million barrels were produced. That's not that optimistic.
There was also a headline suggesting that OPEC may have a meeting with producers to determine a "fair" price for crude.
What do I expect?
Speculators try to front-run such events hoping to ride the momentum. These momentum pops tend to be self-sustaining as traders begin to cover their levered-shorts.
The market saw the same thing earlier in the year only to engage in another "transitory" breakdown.
The USDCAD is up big, and price action will likely test the consolidation channel, which will act as the first line of support. If price action closes underneath it, look for the pair to test support at 1.3090/1.31.
The speculative ride could last near-term, where the 200-4H would be a great downside target. The 4H +/- DMI is showing a possible convergence that would further suggest more downside.
Key resistance levels will act as upside target is crude begins to unwind, considering that USDCAD does not completely unravel. Minor trend support looks to be broken, and bulls will have to attempt to get back over that hump.
also the FED watches very specificinflation (PCE) - https://research.stlouisfed.org/fred2/series/PCEPI
(some proof - http://www.federalreserve.gov/newsevents/press/monetary/20120125c.htm)
thats why september rate hike is not in the hands (that PCE is also below 1% y/y basis)
to repeat 2008/9 scenario there need to be some kind of bubble pop in the States. could it be China driven?
There are a multitude of bubbles, globally. I don't know if one particularly will cause havoc in the US, but this is the age of globalization. Everything is interconnected. There are several housing bubbles; clearly inflationary asset bubbles in developed markets - both stocks and bonds.
In regards to economists: