Non-OPEC leaders meet with OPEC to pledge support to oil production cuts
On Saturday, the OPEC nations met with their non-OPEC counterparts in a bid to iron out the differences and formalize a deal and a commitment from non-OPEC nations to cut oil production. Russia, the largest non-OPEC country pledged its support to limit the overall non-OPEC oil production by 600,000 barrels per day. Russia alone is expected to cut production by 300,000 barrels per day starting January 2017 which is half of the non-OPEC oil production. The 600,000 barrel in production cut is the largest by the non-OPEC nations in what many called unachievable.
WTI crude oil prices gained over 5% in early Asian trading session today on the news.
The move follows up from the November 30th agreement by the 14-nation OPEC oil cartel to limit oil production by 32.5 million barrels in an effort to stabilize the oil markets. It was later endorsed by participation from non-OPEC nations which will share a part of te production cuts effective January 2017.
Amid doubts on whether OPEC and non-OPEC nations will follow through on the deal, the rally in oil prices has also lifted the oil dependent currencies such as the Canadian dollar and the Norwegian kroner.
USDCAD has resumed its bearish decline, now running into two consecutive weeks. The U.S. dollar gapped lower in today's opening session and is currently seen to be bearish briefly dipping to early intraday lows of 1.3110.
This week is also important as Wednesday’s Federal Reserve meeting is on the agenda with the markets expecting the central bank to hike interest rates by another 25 basis points, pushing the Fed’s short term interest rates to 0.75%.
How to trade binary
The U.S. dollar which has been trending higher since early November is seen taking a pause to the rally ahead of the Fed's decision. A rate hike is almost 100% priced in and the dollar has posted strong gains across other major currencies. The exception has been the Canadian dollar which has managed to maintain its bullish momentum against the U.S. dollar.
Price is likely to touch down to the 1.3100 support level, but there is scope for the dollar to regain some of the losses by filling the gap at 1.3170. The overall bias is likely to remain to the downside as long as 1.3100 support is not tested, USDCAD daily PUT options near 1.3170 is ideal for a 21:00 GMT expiry time.
Target price: 1.3170
Expiry: 21:00 GMT