CAD to resume weakness on lower oil

FX trends rarely reverse overnight. We've seen marked strengthening in CAD after the BOC opted - incorrectly, to not act last week. I've discussed the need for Canadian QE many times before, and last week's Canadian consumer spending data only further emboldens this call. For an economy that is comparatively rather cautious with leverage, Canadians appear to finally be stretched a bit too thin. With a continuing and sustained fall in oil prices, the BOC will be forced to act!

Since last week's strengthening, we've seen the 62% fib retracement act as support. In tandem with this morning's renewed weakness in oil, USDCAD breached bearish trendline resistance. We're still waiting for confirmation of the breakout > 1.4220. If we get that, we're targeting a retest of 1/13-1/14's consolidation zone at 1.4335.