The current bear market in WTI crude oil has done nothing to deter CAD backers, at least not this week. As a result, the USD/CAD is trending south, toward the bottom of daily value at 1.3400. If WTI can mount a positive session going into this week’s inventories, we may see a test of May’s low (1.3357).

Pretty much everyone is aware of Canada’s dependence on energy exports. Natural gas and crude oil production account for about 10% of national GDP; when energies are down, the USD/CAD is up. This has not been the case today as forex players are slamming the Greenback.

USD/CAD Breaks Daily Support

The daily chart for the USD/CAD shows the degree of bearish pressure. When rates broke through the 1.3475-1.3450 area, a rapid plunge to 1.3415 ensued. Given the intraday rebound of July WTI crude and the USD’s relative weakness, May’s Low (1.3357) is likely to be tested in the near future.

Here are the levels to watch in this market for the rest of the day:

• Resistance(1): Bollinger MP, 1.3459
• Resistance(2): Daily SMA, 1.3462
• Support(1): May’s Low, 1.3357

Bottom Line: Until elected, I will have buy orders queued up from 1.3351. With an initial stop at 1.3324, this trade produces 54 pips on a 2:1 risk vs reward scenario.

The next 24 hours are going to be big for the Loonie. Weekly crude oil inventory numbers, the U.S. ISM Non-Manufacturing Index, and Canadian Q1 Labor Productivity are all due for release. With a bit of luck, this trade will go live following today’s API Crude Oil Stocks report.