Rebound in oil costs helps to raise the loonie alongside improved danger sentiment
USD/CAD broke above the July excessive @ 1.3290 in in a single day buying and selling after oil costs slumped alongside danger belongings. There is a trace of a rebound immediately with WTI up by 1.eight% to $54.40 at the moment and that is serving to to offer some aid for the loonie following yesterday’s stress.
The break of the 1.3290 degree is an effective platform to construct on for patrons to retest the yr’s excessive @ 1.3386, near the 76.four retracement degree the place it stalled again in June. However the caveat right here is that the break was a results of a shift in danger sentiment and that tends to be probably the most fickle-minded breaks you will get in markets.
For now, regardless of the rebound in oil, the loonie is failing to place up any modest good points in opposition to the greenback. The pair nonetheless solely trades in a 37 pips vary for the day hovering round 1.3290-00 ranges for probably the most half up to now.
The important thing to buying and selling the pair shall be to be careful for a way US equities carry out later within the day as I reckon that would be the key driver of danger sentiment in markets immediately (this can in flip have an effect on oil costs as properly). Ought to danger sentiment begin to bitter once more, anticipate the pair to maneuver again in the direction of the highs and threaten a transfer in the direction of the June excessive.
For my part, the upside transfer nonetheless seems to be extra beneficial until worth threatens a break under key near-term help ranges i.e. 100 and 200-hour transferring averages @ 1.3197 and 1.3210 respectively. Nevertheless, be warned that room for additional good points stay restricted by the June highs. Provided that that breaks will we see an extension in the direction of 1.3500.