- USD/CAD trades flat on the day around 1.2930 despite strong crude oil prices.
- Crude oil market gains have been spurred by news that OPEC+ are making headway towards a deal.
USD/CAD trades flat on the day, despite a solid rise in crude oil prices. Though the pair managed to eke out fresh multi-year lows below 1.2920 this morning, support in the 1.2920s has largely held and prices are now seemingly rangebound between the 1.2930s and 1.2950s.
CAD fails to rally in tandem with crude oil
Recent reports that OPEC+ has made headway towards a deal gave oil markets a reason to cheer. Front-month WTI contracts are up more than $1 on the day (or over 2.5%) and have rallied into the upper $45.00s per barrel. Markets hope that the cartel will agree on a three-month extension to their current supply cuts of just under 8M barrels per day, which are currently scheduled to end in January. The positive OPEC+ news overshadowing bearish EIA crude oil inventory numbers, which showed headline crude oil stocks drawing 0.679M, less than the expected draw of 2.358M.
However, CAD has broadly failed to pick up in tandem with crude oil prices. Soft Labour Productivity data for Q3 might be weighing on the loonie a tad, with productivity dropping 10.3% in the third quarter following a 10.5% surge in Q2. Lockdowns and the impact of the pandemic do of course distort the data, so it is difficult to see how much of this deterioration in productivity will persist into Q4 and beyond.
USD/CAD continues south within bearish wedge
Though USD/CAD is yet to break significantly to the south of the key support area in the 1.2920s (the 9 November low), its near-term bias remains towards further downside given that the pair is trading within a bearish wedge. The trendline support of this wedge links the 16, 18 and 30 November lows, while the trendline resistance of this wedge links the 23, 24 and 30 November highs, as well as Tuesday’s and Wednesday’s highs.
Should a convincing break of the 1.2920 area ensue, the most immediate area of support would be the psychological 1.2900 level. Below that, the next area of support goes right back to October 2018 low which sits just below the psychological 1.2800 level. Thus, if USD/CAD can crack below 1.2900, it will have a relatively open run at 1.2800.
To the upside, a break to the north of USD/CAD’s bearish wedge would open up the door to a test of the 30 November high at just above the psychological 1.3000 level, as well as resistance around the 1.3030s (the 25 November high and 18 November low).
USD/CAD four hour chart
-637425268423947174.png)
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD holds gains near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.