USD/CAD breaks higher towards 1.2900 amid firmer USD, WTI sell-off
- USD/CAD receives a double booster shot from a weaker USD and WTI sell-off.
- China wreaks havoc in markets yet again, triggers a range breakout in the pair.
- Bulls eye 50 DMA barrier after surpassing the 100 and 21 DMAs.
Having based out at the critical 200-Daily Moving Average (DMA) at 1.2748 last week, USD/CAD found buyers once again near the latter, staging a solid rebound towards the 1.2900 round number.
In doing so, the major broke the consolidative mode to the upside and stormed the mildly bullish 100 DMA at 1.2802, now briefly recapturing the bearish 21 DMA at 1.2854. The latest leg higher in the USD/CAD pair is fuelled by a combination of a broad-based US dollar upswing and a 2% sell-off in the WTI price.
Both the safe-haven dollar and the higher-yielding US oil are influenced by the resurfacing concerns over the Chinese economic slowdown after the country’s reported a drop in consumer spending, industrial sector and fixed asset investment activity.
The black gold also bore the brunt of comments from Aramco, Saudi Arabia’s oil giant. Aramco’s CEO Amin Nasser said that they stand ready to raise crude oil output to its maximum capacity of 12 million barrels per day (BPD) if requested to do so.
All eyes now remain on Wednesday, as it will see the release of the Canadian inflation figures, US Retail Sales and the Fed minutes. In the meantime, the major will take cues from risk sentiment and dynamics of the dollar and oil price.
USD/CAD daily chart
USD/CAD technical levels to consider