Comparison of Oil Prices with USDCAD
That's because Canada is a producer and exporter of crude oil. The increase in oil prices is expected to help boost Canada's economy. On the other hand, it is feared that the fall in crude oil prices will have a negative impact on the Canadian economy. This optimism or pessimism will have an effect on the Canadian dollar (CAD).
Now, in reading currency pairs, for example USDCAD;
If CAD strengthens against USD, USDCAD price moves DOWN. Conversely, if CAD weakens against USD, USDCAD will move UP.
That's why many traders monitor the movement of crude oil prices before taking a position on USDCAD. If there is a signal that oil prices will decline, they will be prepared to look for a buy signal at USDCAD and vice versa.
How to Read the Opportunities?
Analytical techniques by utilizing the correlation between USDCAD and crude oil prices are usually effective for medium to long-term transactions. Less effective for short-term transactions (H1 down).
