USDCAD failed in its recent attempts to break past the 1.3250 minor psychological resistance and is moving closer to testing support at the 1.3000 mark. This could complete the formation of a double top pattern, with a break below the neckline likely sending the pair lower by at least 250 pips.
However, the 100 SMA just crossed above the 200 SMA to show that the path of least resistance is to the upside. This means that the 1.3000 level could still hold as support and push price to bounce back up to the 1.3250 resistance for the formation of another top or even an upside break. Stochastic is already indicating oversold conditions, which means that bearish momentum is exhausted, so buyers might take over.
The OPEC gathering in Algiers concluded with energy ministers saying that they’ve reached an agreement. However, this refers only to an outline for an output deal and not an actual production cap just yet. As it turns out, they have yet to agree on the size and scale of the program, and market watchers will have to wait until the next official OPEC meeting in November 30 to see if the deal will push through.
For now, crude oil bulls are pushing the commodity price up, which is supporting the positively-correlated Canadian currency as well. Stronger oil prices could mean strong revenues for Canada’s energy sector, which comprises a huge chunk of its business and export activity.
As for the US dollar, traders still seem to be hopeful for a Fed rate hike in November or December. Data has been slightly better than expected in terms of durable goods orders for August but the July readings were downgraded. There’s not much in the way of top-tier US data today so traders might hold out for next week’s NFP release.