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USD/CAD seesaws near 1.3550 amid firmer Oil price, Fed Minutes, US/Canada employment eyed

  • USD/CAD struggles to defend the first daily gain in three, retreats of late.
  • Oil prices remain firmer despite fears of receding energy demand from China.
  • US Dollar bears the burden of softer data, fails to cheer firmer yields.
  • Holidays in multiple markets restrict USD/CAD moves ahead of the key data/events.

USD/CAD takes offers to reverse the year-start gains around 1.3550 even as holiday-thinned markets probe traders during early Monday.

In doing so, the Loonie pair cheers firmer prices of Canada’s main export item, WTI crude oil, despite the US Dollar’s recent corrective bounce. It’s worth noting, however, that the lack of major data/events and cautious mood ahead of the Minutes of the latest Federal Open Market Committee (FOMC) meeting, as well as Friday’s December month employment numbers for the US and Canada, probe the Loonie pair traders.

WTI crude oil rose the most in over a week the previous day, grinding near $80.50 at the latest, as a softer US Dollar helped the black gold buyers despite fears of easing demand, mainly due to the Covid fears emanating from China. Also acting as the challenge for the WTI bulls, but were ignored, were the headlines from the US Energy Information Administration (EIA) as it said, “Demand for US crude and petroleum products fell in October even as oil production ticked up to its highest levels since the COVID-19 pandemic.”

On the other hand, the US Dollar Index (DXY) refreshed a six-month low of around 103.40 after witnessing downbeat US data, near 103.47 by the press time. That said, Chicago Purchasing Managers’ Index crossed the market consensus of 41.2 and the 37.2 previous readings to print the 44.9 figures for December. Even so, the activity gauge signaled contraction for the fourth consecutive month. It should be noted that the year-end consolidation also weighed on the DXY amid the sluggish sessions.

The recent updates from China and the International Monetary Fund (IMF), however, appear to challenge the USD/CAD moves going forward.

On Saturday, Chinese President Xi Jinping appeared in a televised speech to mark the New Year and called on for more effort and unity as the country enters a "new phase" in its approach to combating the pandemic. On the same line, China’s NBS Manufacturing purchasing managers' index (PMI) fell to 47.0 in December versus 48.0 market expectations and prior, marking the biggest drop in activities since February 2020. Further, the Non-Manufacturing PMI also slumped to 41.6 during the stated month versus 46.7 previous readings.

Following that, IMF’s Managing Director Kristalina Georgieva said that the New Year is going to be tougher than the year we leave behind. The IMF Chief also added, “Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously.”

Amid these plays, Wall Street closed with losses while the US 10-year Treasury bond yields rose 4.5 basis points (bps) to 3.879%.

Looking forward, holidays in multiple markets could restrict the USD/CAD intraday moves, in addition to the cautious mood ahead of the key data/events. However, the bears appear to run out of steam and hence the odds of witnessing a recovery are high. As a result, the aforementioned catalysts, namely the Fed Minutes and employment numbers for the US and Canada, will be reacted with more strength in the case suggesting the Loonie pair’s rebound.

Technical analysis

Although the USD/CAD pair bounces off 50-DMA support, around 1.3520 by the press time, the recovery remains elusive unless it crosses the previous support line from November 15, near 1.3625 at the latest.

Additional important levels

Overview
Today last price1.3533
Today Daily Change-0.0007
Today Daily Change %-0.05%
Today daily open1.354
 
Trends
Daily SMA201.3607
Daily SMA501.3527
Daily SMA1001.3444
Daily SMA2001.3122
 
Levels
Previous Daily High1.3582
Previous Daily Low1.3514
Previous Weekly High1.3612
Previous Weekly Low1.3484
Previous Monthly High1.3705
Previous Monthly Low1.3385
Daily Fibonacci 38.2%1.354
Daily Fibonacci 61.8%1.3556
Daily Pivot Point S11.3508
Daily Pivot Point S21.3477
Daily Pivot Point S31.344
Daily Pivot Point R11.3576
Daily Pivot Point R21.3613
Daily Pivot Point R31.3644

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
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