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Rebounding Oil Prices Help Canadian ETFs


CurrencyShares Canadian Dollar Trust (NYSE: FXC) flirting with 200-day moving average.

Canada’s oil production could either lift or weigh on the economy.

Some observers have warned of a bubbling real estate sector.

Rebounding oil prices have helped push the CurrencyShares Canadian Dollar Trust (NYSE: FXC) to a gain of more than 5% in just the past month.

Now the ETF is flirting with its 200-day moving average, a level it has not closed above for nearly a year, according to ETF industry analyst ETF Trends.

Canada enjoys large natural resource reserves. As already witnessed, Canada's oil production could either lift or weigh on the economy, depending on the energy market. Additionally, as the prospect of more about droughts and dry weather conditions, Canada's freshwater reserves, which account for 20% of the world's freshwater, could come into play.

Some observers have warned of a bubbling real estate sector, and traders have bet against Canadian real estate through shorting Canadian banks. In the meantime, the national median home price continues to climb to all-time highs. We will have to monitor how the government plans to engineer a soft landing for the real estate market in an attempt to mitigate a potential fallout.

"All eyes are on March 22 when Prime Minister Justin Trudeau will reveal his first budget since his Liberal party won the general election in October of 2015," according to OptionsExpress.

OptionsExpress said the budget is expected to show a much larger deficit than originally thought.

"During the campaign, the Liberal party promised to invest in infrastructure to spur job creation and economic growth," according to the website. "The unemployment rate in February rose to a 3 year high of 7.3%. Since winning the election, oil prices have fallen further and the formerly booming province of Alberta is likely to remain in recession throughout 2016. However, the province of British Columbia is doing quite well and is expected to lead Canada in growth for 2016 with a forecasted growth rate of 2.7%," according to OptionsExpress."

Canada's equity market is one of two developed markets, along with New Zealand, that are back to positive this year. Furthermore, the rebounding precious metals prices has helped prop up the miners space.

"There's been an increase in volume after the Loonie bottomed out in January, potentially indicated short covering. 14 day RSI is bullish at 71.10, slightly overbought. The .7800 level looks to be the next point of resistance while support is found at the January lows around .6825," adds OptionsExpress.

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