- USD/CAD price struggles to gain as the WTI gains keep the pair under pressure.
- Canadian employment data on Friday may provide some directional bias to the market.
- Risk-off sentiment stemming from Chinese real estate may lend some support to the US dollar being a safe haven asset.
The USD/CAD price analysis suggests a neutral stance as WTI price surge and risk-off sentiment continue to play a tug of war between CAD and USD.
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The Canadian dollar is currently being influenced by general sentiment towards the US dollar and oil prices.
Data on domestic employment will be released on Friday, so the Canadian dollar will not benefit until then. However, analysts predict an increase of 60,000 jobs.
Yesterday, the US reported that factory orders were up 1.2% month-over-month, compared to an analyst consensus of 1%. According to a report on building permits in Canada, building permits declined 2.1% month-on-month in August, compared with analysts’ expectations of 3% growth.
Traders focused on the performance of the commodity markets, which had minimal impact on currency performances. The price of WTI crude oil surged after OPEC+ announced it would follow its production adjustment plan and increase output by 400,000 barrels per day (BPD) in November.
OPEC + did not increase production by 800,000 barrels a day as oil consumers hoped, so this was disappointing to them. While WTI continues to rise, it has managed to break through the $77 mark for the year and is striving to gain a foothold beyond the $78 mark. A move above this level will test the psychologically important $ 80 level, which will be bullish for commodity currencies, including the Canadian dollar.
Conversely, the gossip about Fantasia Holdings Group and Sinic, China-based real estate firms, combines uncertainty over US infrastructure spending and widening debt ceiling to affect market sentiment and raise demand for the US dollar as a safe haven.
As a result, the 10-year US Treasury bond yield rose 1.7 basis points (bp) from the previous day to 1.50%, while the stock futures remain sluggish and the dollar index is up around 0.30%. The bulls broke 94.00 at the time of writing, up 0.17% on the day.
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USD/CAD price technical analysis: Key SMAs to cap gains
The USD/CAD price is attempting to rally from the lows of 1.2600 handle. The price is heading towards a test of 200-period SMA on the 4-hour chart. The 50-period and 20-period SMAs coincide at the same zone. However, the volume for the up wave is not quite encouraging. It shows that the upside is only a technical correction, and the bears may resume their downtrend. The support levels lie at 1.2600 ahead of 1.2560.
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Saqib Iqbal
