USD / CAD targets 1.2800 test as oil prices regain previous session gains

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  • USD / CAD is recovering amid a decline in crude oil prices from previous lows.
  • The pair is now slightly below 1.2800, having previously been as low as 1.2710.
  • USD / CAD appears to be moving higher within an uptrend channel.

The USD / CAD It has moved higher in recent hours and is now trading near 1.2800, above the previous session’s lows of 1.2710, in tandem with a drop in crude oil prices from previous highs. On the day, the pair was up 0.1%, having previously lost 0.5%, though, for the most part, it has held onto intraday ranges this week.

USD / CAD price action on Wednesday suggests that, for the time being, the pair is likely to continue moving higher within the confines of a short-term bullish trend line. Meanwhile, the fact that the 21-day moving average has recently crossed above the 50 and 200 DMAs (with the 50 SMA above the 200) suggests that the uptrend has decent momentum. If this technical trend persists, a resistance test at 1.2900 seems likely.

With global oil markets and risk appetite still on the ropes amid ongoing fears about the impact of the new highly transmissible Omicron variant, the above technical trend makes sense. This is especially the case if a severe omicron outbreak delays the Bank of Canada’s monetary policy normalization plans.

Meanwhile, Canadian data was ignored on Wednesday. For reference, the Markit Manufacturing PMI in November remained strong at 57.2 (slightly below 57.7 in October) and the growth of building permits in October was stronger than expected at 1.3% MoM (versus forecasts for a 1.0% month-on-month drop). US data in the form of a robust November ISM manufacturing PMI survey and a robust estimate of ADP’s national employment change in November received more attention, but generally failed to support the dollar, with the DXY practically trading. lateralized.

Fed Chairman Jerome Powell’s aggressive tone this week on the economy means that strong ISM services PMI numbers on Friday and a good jobs report on Friday probably won’t have much of an impact on the dollar’s overall fortunes. Of course, the November US employment report will continue to be closely scrutinized, as will the November Canadian employment report released at the same time.

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