CAD May Rise on OPEC Optimism, GBP Bracing for Brexit Woes
Canadian Dollar, OPEC, Crude Oil, Brexit, British Pound – TALKING POINTS
- Canadian Dollar may rise with crude oil after OPEC agreed to extend production cuts
- British Pound may suffer on Brexit woes as EU-UK fail to deliver meaningful progress
- USD/CAD is hovering just above a key shelf – will the floor hold or succumb to sellers?
Friday’s session ended on an unexpectedly optimistic note after jobs data out of the largest economy in the world – and new epicenter of the coronavirus pandemic – showed positive figures. Nonfarm payroll data reported a 2509k reading, exceeding the -7500k forecast with the unemployment rate for May dropping to 13.3 percent, far below the 19.0 percent estimate.
After the data was released, Wall Street rallied with the S&P 500 ending the day almost three percent higher. The risk-on tilt that it catalyzed subsequently put a discount on anti-risk assets like the US Dollar and Japanese Yen while a premium was put on growth-oriented ones like AUD, NZD and petroleum-linked currencies. The latter group was given a further boost over the weekend that may spill over into the upcoming session.
On Saturday, the Organization of Petroleum Exporting Countries (OPEC) agreed to extend the record-low production cuts they implemented in May all the way through July. The agreement stipulates that production within the alliance will drop by 9.6 million barrels per day. The extraordinary measures were taken to help stabilize energy markets amid the Covid-19 pandemic. The next meeting will take place on June 18.
Monday’s Asia-Pacific Trading Session
This tailwind may help push the Norwegian Krone and Canadian Dollar higher. Asia-Pacific stock markets may join the rally, but the veracity of their ascent as compared with last week may be suspect amid signs of exhaustion. The British Pound may start off on a weak foot after commentary last week about Brexit cast a dark and gloomy shadow over the UK’s future.
USD/CAD Technical Outlook
USD/CAD is trading on the first shelf of a three-tiered support range between 1.3395, 1.3329 and 1.3208 after falling below a familiar stalling point at 1.3778. Favorable fundamental forces could help push the pair to 1.3329, though sellers may be overwhelmed by buyers looking to find a bottom. Consequently, a recovery may ensue prior to the retest of the floor at 1.3208.
USD/CAD – Daily Chart
USD/CAD chart created using TradingView
--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.