- USD / CAD remains above 1.2800 as risk appetite and crude oil markets remain defensive
- The loonie is the second worst G10 currency player of the day, also weighed for profit taking after strong jobs data last Friday.
The USD / CAD it has been oscillating in recent trading, climbing as high as 1.2830 during the early part of the European session on Monday morning before briefly dipping back below 1.2800. Prices are now comfortably settling above the 1.2800 level and the pair is currently trading with daily gains of around 0.2% or 30 pips.
Profit taking and lower oil prices weigh on the loonie
The loonie is the second worst performing currency in the G10 so far this Monday. In part, this is a reflection of profit-taking in the wake of last Friday’s much stronger-than-expected November jobs report that saw the pair spike below 1.2800 from above 1.2850. However, more broadly, today’s trading risk tone is weighing on the risk-sensitive loonie, especially weak crude oil prices.
Also, a drop in November’s Ivey PMI figures is likely not to do the CAD much favors either. The seasonally adjusted headline figure unexpectedly fell to 52.7 in November versus expectations of an increase to 54.7 from 54.5. Meanwhile, the non-seasonally adjusted reading fell to 52.4 from 55.9. Disappointingly, the employment subcomponent of the Ivey survey fell to 48.1 from 56.1 in October. Obviously, the Canadian labor market held up well in November, as last Friday’s data indicated, but Monday’s PMI number from Ivey could herald weakness in 2021, especially as economic restrictions tighten to contain the Covid019 outbreak. .
USD / CAD remains above support at the October 2018 low (at 1.3173) for now. If this level rises, it would open the door for a new move south towards the May 2018 lows between 1.2830-1.2840. The next major level to the downside beyond that is the April 2018 low at 1.2525.
Given the degree of strength in the CAD over the past few days, a pullback to the upside in USD / CAD is likely. An important area of resistance would be a downtrend line linking the lows of November 16, 18 and 30 and is likely to come into play at 1.2840.
1 hour chart
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
