USD/CAD Reverses Course
Today has brought more whipsaw action to the USD/CAD, driven by a timely news headline and weakness in the WTI crude oil market. At the mid-session point, 1.3200 was on the immediate horizon amid sustained and bearish price action. Now, rates have reversed 50 pips higher. What happened?
The driver of this reversal is a Bloomberg report that the White House is thinking of placing restrictions on investments in Chinese corporate listings. This is a huge deal, in that the new restrictions would impact billions of U.S. dollars currently flowing into Chinese equities. The potential fallout is tough to measure, but has prompted a swift sell-off in the U.S. indices and a rally in the USD.
On the commodity front, WTI is showing modest weakness, sliding about 0.60% to just north of $56.00. This isn’t a huge market driver, but is certainly factoring into trade of the USD/CAD.
USD/CAD: Technical Outlook
The intraday downtrend is long gone for the USD/CAD, with rates rebounding mightily during the mid-session. Once again, any bit of trade war news out of the White House is being actively priced by investors.
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Here are the levels to watch for the remainder of the session:
- Resistance(1): Bollinger MP, 1.3254
- Support(1): Daily SMA, 1.3249
- Support(2): Current Wave 62% Retracement, 1.3201
Bottom Line: At press time (12:45 PM EST), it looks like the USD/CAD are poised to close above the 1.3250 level. In the event we see rates slide toward 1.3225, a long trade may set up for early next week.
As long as the Swing High (1.3310, not pictured) remains valid, I will be buying at 1.3209. With an initial stop loss at 1.3179, this trade produces 30 pips on a standard 1:1 risk vs reward ratio.
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