The US dollar has traded firmly against the Canadian dollar since hitting a three-month low near CAD1.3225 to start the week. It poked through CAD1.3300 yesterday but failed to close above it. The market has not given up. To really get the ball rolling it needs to push the greenback above CAD1.3335 where a roughly $535 mln option is placed that expires later today. The downside is also protected with a $1.1 bln option at CAD1.3275. The US dollar is also trading firmly against the Mexican peso after dipping below MXN19.10 yesterday. Initial resistance is seen near MXN19.25-MXN19.30. Note that oil prices are breaking down today, with WTI off about 1.5% and Brent down around 2.5%. The large build in US inventories (API estimate) and concerns about demand weigh on sentiment after yesterday’s quiet consolidative session. The government’s estimate (EIA) is expected to report a one million barrel draw. Yesterday the EIA shaved its production forecasts for this year and next. Output next year is expected to rise to 13.26 mln barrels a day from an estimated 12.32 mln barrels a day this year.
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