USD Continues to Remain Strong Against CAD as Crude Oil Prices Continue to FallBy Annie Reona | Wednesday, July 22nd, 2015
As crude oil prices have reportedly dropped well below $60 per barrel, USD is able to remain strong against CAD. This bull run began last month on June 18, and has continued full speed ahead until now, when it appears to have at least slowed its ascent. Actually, CAD has been the weaker member of nearly all major pairs due to the falling crude oil prices, with the USD/CAD pair reaching six-year highs at 1.2126.
Binary traders are banking on this by using one touch binary calls to extract leverage on the extended profits. These strategies that employ binary delta calls have allowed binary options traders to see returns of two, three, and four times their investment, allowing great potential for gains in this market environment.
The benefits of choosing to employ on touch option spread strategies is that the yields can be extremely high when there are high volatility plays going on. The wider spreads indicate that there is a lack of liquidity, and the USD/CAD spreads for one touch options are barrier and time levels. Typically, when there is a change of 1 pip, the option price changes by about 0.01%.
Keeping a close eye on the crude oil prices as well as the crude oil inventory will help traders determine the direction of CAD. If the inventory levels are high and the price per barrel continues to drop, then there is a good chance that CAD will also continue to drop. However, if crude oil prices do start to rise again, then CAD could also follow suit.
Another element that needs to be considered when it comes to crude oil prices are the developments in Iran. The nuclear agreement between the US and Iran will allow Iran to once again sell crude oil to the global market. Iran previously made up 1% of the total market, and will soon be able to put 800,000 to 900,000 barrels of oil into the market every day.
Experts predict that another increase in supply will cause crude oil prices to continue to drop, although they are estimating that they will not drop below $50 per barrel. The re-introduction of Iranian oil into the market will begin slowly in the upcoming months, but they are not expected to reach full production again until late into 2016.Published in News & Analysis