- Saudi Aramco is prepared to increase oil output.
- The US dollar rally might resume.
- Bulls are up against strong resistance in the charts.
Today’s USD/CAD outlook is bullish as the Canadian dollar weakened amid the falling oil prices. Oil prices fell for a second session on Monday as the leader of the world’s largest exporter, Saudi Aramco, declared that his company is prepared to increase output. At the same time, several offshore sites in the US Gulf of Mexico will resume production following a brief outage last week.
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Amin Nasser, the chief executive of Saudi Aramco, told reporters on Sunday that the company is prepared to increase crude oil output to its maximum level of 12 million barrels per day (bpd) upon request from the Saudi Arabian government.
“We are confident of our ability to ramp up to 12 million bpd any time there is a need or a call from the government or the ministry of energy to increase our production,” Nasser said.
On the other hand, the dollar held steady at 133.33 after last week’s 1% loss.
“Our sense remains that the dollar rally will resume before too long,” argued Jonas Goltermann, a senior economist at Capital Economics.
“It will take much more good news on inflation before the Fed changes tack. The minutes from the last FOMC meeting and the Jackson Hole conference may push back further against the notion that the Fed is ‘pivoting.'”
USD/CAD key events
Canada will release the Manufacturing Sales report, which tracks the total sales generated at the manufacturing level. It will also release the Wholesale sales report, which tracks the wholesale level’s overall sales value change. It serves as a forecaster of future consumer spending.
USD/CAD technical outlook: Bulls attempting a break above trendline resistance
The 4-hour chart shows the price breaking above a bearish trendline after bouncing off the 1.27351 support level. The price is also breaking above the 30-SMA, showing that bulls are trying to take over. The RSI also supports bullish momentum above 50.
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The trendline and the 30-SMA make a strong resistance zone. Therefore, the price would have to close above to confirm the bullish trend. A break above this zone would retest previous support at 1.28438 as resistance. On the other hand, if bears return, the price is likely to retest 1.27351.
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Saqib Iqbal
