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USD/CAD rises above 1.33 amid falling oil, thing liquidity

The price of the black gold doesn’t have a Labor Day Holiday. Major indices are falling amid ongoing  worries about China.

This  weighs on the Canadian dollar, with USD/CAD crossing the 1.33 line.  The double top at 1.3325 looms. Will we see a breakout now?

WTI is down to the $44 handle and Brent is around $48. This is a slump after the big recovery.

Prices of oil have already been lower, but the market wants to sell the C$:  the Canadian dollar slides with every fall in oil prices and  only partially recovers when oil bounces back.

And even  WTI still keeps a safe distance from breaking below $40, there is a growing notion that the low prices are here to stay.  The Chinese stock markets reopened after the holiday and they closed lower.

Worries about Chinese growth continue casting dark clouds about the whole global economy and this means that demand for oil in the near and not so near future will likely be low.

USD/CAD is trading at 1.3301 at the time of writing after having reached 1.3309. The double top is at 1.3325 (as the chart below shows). Can it break higher?

As this is Labor Day both in the US and Canada, liquidity is very thin, so a move above this level could happen, but could see no follow  through once markets fully come back online.

And there’s another big event for the loonie this week: the decision by the Bank of Canada. Stephen Poloz and his colleagues are unlikely to cut the interest rate for the third time this year, but anything can happen. A dovish message, now that Canada is officially in recession, is on the cards from the BOC.

Support awaits at 1.3220 with more at 1.3120.

More:

USDCAD September 7 2015 CAD falling on Labor Day

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.