WTI&ISM In Play, USD/CAD In Limbo - Forex News by FX Leaders

WTI&ISM In Play, USD/CAD In Limbo

Posted Thursday, October 3, 2019 by
Shain Vernier • 1 min read

It has been a wild day on Wall Street, led by whipsaw trade in the U.S. indices. By comparison, the USD/CAD has been tame, posting a modest 41 pip range. Following the massive trend day up of Wednesday, the lackluster action in the Loonie is a bit surprising.

However, there are two good reasons for the tight trading range: the lagging U.S. ISM Non-Manufacturing PMI and plunging WTI crude oil pricing. These factors have largely canceled each other out, prompting rotational trade in the USD/CAD. Let’s dig into the daily technicals and see what may be in store for late-week trade.

USD/CAD Enters Consolidation

At this hour (12:20 PM EST), the USD/CAD appears to be taking a nap. WTI crude is trading in the vicinity of $52.00 and U.S. equities sentiment is rebounding from the early-session ISM release. 

USD/CAD, Daily Chart
USD/CAD, Daily Chart

For now, a bullish bias is warranted toward this pair. Rates have not yet retraced 38% from Wednesday’s breakout; until this occurs, the long side of this market is ideal. In the event a reversal develops in the coming 24 hours, there are two support levels worth watching:

  • Support(1): Daily SMA, 1.3267
  • Support(2): Bollinger MP, 1.3251

Bottom Line: Right now, it is WTI crude oil prices vs FED rate cuts for the USD/CAD. In the event WTI finds stability and tomorrow’s U.S. Non-Farm Payrolls disappoint, a long trade may set up in this market. Until Friday’s closing bell, I will have buy orders in queue from 1.3272. With an initial stop at 1.3244, this trade produces 30 pips on a slightly sub-1:1 risk vs reward ratio.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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