USD/CAD slips back under 1.2650, respects short-term negative trendline in quiet trading conditions

USD/CAD continues to gradually push lower, with the price action capped by a downtrend from the weekly higher.
At present, the pair trades around 1.2600, but if oil continues to recover next week the pair could return to 1.2600.

Joel Frank Independent Analyst

USD/CAD has slipped back under the 1.2650 level in recent trade from earlier session highs around 1.2680. The pair appears to have run into resistance in the form of a downtrend that has formed since the pair slipped back from earlier weekly highs close to 1.2750. Technicians will now eye a retest of earlier session lows around 1.2640, though market conditions are currently very thin amid the absence of US participants for Thanksgiving, meaning any decisive break lower will probably have to wait for next week.

At current levels around 1.2650, USD/CAD is nearly back to flat on the week. Given that the pair, when it was trading close to 1.2750, was nearly up by 1.0% on Monday, that is a pretty decent reversal lower. And that reversal lower comes despite a continued broad strengthening of the US dollar amid hawkish Fed vibes (comments from FOMC’s Mary Daly and the Fed minutes) and more strong US macro data.

The reason why CAD has been able to perform well is due to the recovery in oil prices after Tuesday’s underwhelming US (and global) crude oil reserve release. There is speculation that OPEC+ could shift output policy to compensate for the reserve releases at their meetings next week and this has helped oil markets recover. WTI is up more than 3.0% on the week.

Should OPEC+ refrain from further output hikes next week (to the anger of the US and other nations) and send oil prices shooting higher again, this could lend further support to the loonie and the recent bearish technical trend may continue. Traders would likely target a move back down towards the next key area of support at 1.2600.

Author

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

GBP/USD slides below 1.3250 after failing to break through 23.6% Fibo

The GBP/USD pair meets with a fresh supply during the Asian session on Wednesday and moves away from a nearly two-week high around the 1.3275 region, touched the previous day. Spot prices currently trade around the 1.3235 zone, down 0.20% for the day, as traders look to speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Kevin Warsh for a fresh impetus.

EUR/USD keeps losses near 1.1400 after soft Eurozone inflation data

EUR/USD keeps the offered tone intact near 1.1400 in European trading on Wednesday, pressured by softer Euronze and German inflation readings and receding bets for aggressive tightening by the European Central Bank (ECB). Traders will take more cues from the US Manufacturing PMI due later in the day.

Gold stays in red below $4,000, awaits Warsh's speech

Gold remains under selling pressure below $4,000, in the red for the third straight day on Wednesday. The Iran uncertainty and Fed hike bets support the USD, weighing on the commodity. Traders now look to Fed Chair Warsh's speech and the US data for a fresh impetus.

ISM Manufacturing PMI expected to signal continued expansion in the US

Attention shifts to Wednesday’s release of the June ISM Manufacturing Purchasing Managers Index, one of the most closely followed indicators of activity in the US manufacturing sector and an important barometer of the broader economy. Markets expect the headline index to remain unchanged at 54.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The European Central Bank Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Federal Reserve, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.