- USD/CAD snaps three-day uptrend, renews intraday low of late.
- Oil price cheers hopes of more demand from China, OPEC+ output cut.
- US Dollar seems bracing for hawkish comments from Fed’s Powell.
- US ADP Employment Change, Q3 GDP and Beige Book eyed as well.
USD/CAD grinds lower as it prints mild losses while refreshing intraday bottom near 1.3565 during early Wednesday morning in Europe. In doing so, the Loonie pair traces firmer prices of Canada’s main export item, WTI crude oil, while cheering a pullback in the US Dollar ahead of the critical data/events.
WTI crude oil prints a three-day uptrend as buyers keep the reins around $79.00 amid hopes of more demand from China after recently easing Covid woes. Also likely to have favored the black gold could be the chatters surrounding a supply cut from the OPEC and its allies, including Russia, known collectively as OPEC+, when they meet on December 05. “OPEC+ is likely to keep oil output policy unchanged at a meeting on Sunday, five OPEC+ sources said, although two sources said an additional production cut was also likely to be considered to support prices,” said Reuters.
Elsewhere, global markets turned cautiously optimistic as China announced multiple measures to ease the strict lockdown in critical areas after witnessing a retreat in the daily Covid infections from a record high. Even so, the world’s second-largest economy kept its Zero-Covid policy intact. Bloomberg reported the reopening of some city buildings in the greater Zhengzhou region, the home of an essential iPhone plant. Earlier on Tuesday, the news broke that China's Guangdong province will allow the close contacts of Covid cases to quarantine at home.
Also likely to have favored the USD/CAD bears is the downbeat prints of the US Conference Board (CB) Consumer Confidence Index dropped to 100.2 in November versus 102.2 prior (revised down from 102.5).
Additionally, upbeat prints of Canada’s quarterly Gross Domestic Product (GDP) for the third quarter (Q3), to 0.7% versus 0.4% expected and 0.8% prior, also favor the USD/CAD bears.
It should, however, be noted that the hawkish hopes from Federal Reserve (Fed) Chairman Jerome Powell, during his first public appearance since November Federal Open Market Committee (FOMC) meeting, seem to challenge the USD/CAD bears. Also likely to have probed the pair’s moves is an early signal for Friday’s United States Nonfarm Payrolls (NFP), namely the ADP Employment Change for November and the second readings of the US Q3 GDP.
Technical analysis
The USD/CAD pair’s sustained trading beyond the previous key resistances and the 100-DMA level surrounding 1.3285 joins the bullish MACD signals to keep the buyers hopeful.
Also read: USD/CAD Price Analysis: Buyers poke key hurdle to the north around 1.3600
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