The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
USD/CAD dropped to key support
2020-10-08 • Updated
The US dollar waned on hopes for the fiscal stimulus, allowing riskier currencies to move higher, and the Canadian dollar as well.
US unemployment claims came out worse than expected: 840 000 Americans filed for jobless benefits, while 820 000 were expected. It should push USD/CAD to the downside.
The Fed’s meeting minutes have encouraged investors by optimistic comments on the current recovery pace. Moreover, Vice Presidential debates were held yesterday, which turned out considerably less contentious. The post-debates reaction has been positive as Joe Biden is leading the elections race. If he wins, the larger fiscal stimulus should be unveiled than in the case of Trump’s victory.
Despite downbeat crude oil inventories, oil prices continue rallying upwards. As you may know, the Canadian dollar is really sensitive to the fluctuations in oil prices. Therefore, the CAD has been boosted by the rebound of the oil market.
USD/CAD went down to the significant support level of 1.3235, which was acting as resistance during the late August-early September period. It’s likely to bounce off this level, but if unemployment claims came out worse than the forecasts, it may weigh on the USD even more and drive the pair to the downside. The move below 1.3235 will push the price lower to the 200-period moving average of 1.3215. On the flip side, the move above the high of mid-August at 1.3270 will clear the way towards the 100-period moving average of 1.3295.
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
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