- OPEC is expected to hike oil output in August.
- After the August hike, oil prices plunged after OPEC failed to assure investors of output increases.
- USD/CAD has broken above the 30-SMA in the charts.
On Friday, the USD/CAD price climbed higher after the OPEC meeting. OPEC said it would stick to hiking oil output in August, which was no surprise to investors.
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“Uncertainty over OPEC+ policy in and after September and fears that the aggressive rate hikes by the Federal Reserve would lead to a US recession and hamper fuel demand dampened sentiment,” said Tsuyoshi Ueno, senior economist at NLI Research Institute.
The OPEC+ members, including Russia, ended their two-day meeting yesterday. Investors were keen on the failure to illuminate their policy from September onwards. US President Joe Biden is expected to visit Saudi Arabia mid-July to discuss energy policy as high fuel prices continue to drive up inflation.
“All eyes are on whether or not Saudi Arabia or any other Middle Eastern oil producer would bolster output to respond to the US request,” NLI’s Ueno said.
Falling oil prices have been known to hurt the Canadian dollar as the country benefits from expensive oil. It is why USD/CAD soars when oil prices plunge.
USD/CAD key events today
Canada will not be releasing any significant news today, and the country is on holiday. Investors will keep an eye out for the United States ISM Manufacturing PMI report that will be released later today. The report is expected to show a drop from 56.1 to 54.9. A higher-than-expected value could push USD/CAD up, while a lower-than-expected value could see the pair drop.
USD/CAD price technical analysis: Bulls to test 1.30003
The 4-hour chart shows a change in the trend to bullish. The price has broken above the 30-SMA and is currently heading higher. This move is a sign that bulls have taken charge and have momentum on their side as the RSI is trading above 50.
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The price found support at 1.28635 and could push to 1.30003, which acted as resistance on June 23. The next resistance would be at 1.30575. Bears will only take over if the price breaks below the 30-SMA and the RSI trades below the 50 levels again.
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