USDCAD - Small Pullback before another drop
Updated
The USD/CAD pair is making a comeback after recent losses in the last session. As of Monday's Asian session, it's trading higher around 1.3660. The Canadian Dollar (CAD) is feeling the pressure due to a drop in crude oil prices. The price of Western Texas Intermediate (WTI) has been on a decline since Wednesday, hovering around $75.00 per barrel at the moment.
The dip in crude oil prices is linked to anticipation surrounding the upcoming meeting of the Organisation of the Petroleum Exporting Countries and their allies (OPEC+). Investors are hoping for an agreement on supply cuts extending into 2024. This decline in oil prices follows OPEC+'s decision to postpone a ministerial meeting to November 30.
On a positive note, the Loonie Dollar (CAD) gained momentum on Friday. This was fueled by a Retail Sales report for September that exceeded expectations. Retail Sales (MoM) showed a 0.6% improvement, beating the anticipated 0.0% and the previous -0.1% decline. Retail Sales excluding Autos remained consistent with a 0.2% increase, compared to the previous -0.2% contraction.
Meanwhile, the US Dollar Index (DXY) is hovering around 103.40, facing challenges in stopping losses despite improved US Treasury yields. The current 10-year and 2-year bond yields in the US are at 4.50% and 4.97%, respectively. This increase in yields is driven by market speculation that the Federal Reserve may consider easing monetary policy in 2024.
Investors are keeping an eye on Canada’s Gross Domestic Product (GDP) and employment data, as well as key indicators from the United States, including Q3 GDP Annualized and Core PCE - Price Index.
from our point of view this “recovery” of USDCAD is only temporary and can be interpreted as a pullback for more downside to come (please chart for details).
The dip in crude oil prices is linked to anticipation surrounding the upcoming meeting of the Organisation of the Petroleum Exporting Countries and their allies (OPEC+). Investors are hoping for an agreement on supply cuts extending into 2024. This decline in oil prices follows OPEC+'s decision to postpone a ministerial meeting to November 30.
On a positive note, the Loonie Dollar (CAD) gained momentum on Friday. This was fueled by a Retail Sales report for September that exceeded expectations. Retail Sales (MoM) showed a 0.6% improvement, beating the anticipated 0.0% and the previous -0.1% decline. Retail Sales excluding Autos remained consistent with a 0.2% increase, compared to the previous -0.2% contraction.
Meanwhile, the US Dollar Index (DXY) is hovering around 103.40, facing challenges in stopping losses despite improved US Treasury yields. The current 10-year and 2-year bond yields in the US are at 4.50% and 4.97%, respectively. This increase in yields is driven by market speculation that the Federal Reserve may consider easing monetary policy in 2024.
Investors are keeping an eye on Canada’s Gross Domestic Product (GDP) and employment data, as well as key indicators from the United States, including Q3 GDP Annualized and Core PCE - Price Index.
from our point of view this “recovery” of USDCAD is only temporary and can be interpreted as a pullback for more downside to come (please chart for details).
Note
As mentioned above, USDCAD bullish move seemed to be only a pullback. We believe that the price will push further south and the price may possibly, once again make a small pullback (as per the chart below), if not already in the trade, this could be an opportunity for entry, or if already in the trade, you could "scale-up" if want to. Best of luck, and please trade with care!
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