It has been a decent Columbus Day session for the Greenback, featuring modest gains against the majors. One of the most active pairs has been the USD/CAD. An intraday downtrend in WTI crude oil has driven the Loonie north, back above 1.3200. For the time being, rates are stable, with little action expected until the Wednesday session.

While most U.S. liquidity providers are out of the office today, tomorrow will be a much different story. Institutional participation is likely to pick up beginning in the coming U.S. overnight session. Traders will be watching China’s CPI (September) and a speech from Bank of Japan Chairman Kuroda early in the Tuesday session. For the USD/CAD, the performance of WTI crude oil is going to drive the action.

USD/CAD Bounces From Downside Support

Last Thursday and Friday brought an epic sell-off to the USD/CAD. Rates fell more than 150 pips in a furious late-week bear run.

Overview: The key level to watch for the USD/CAD is the 62% Current Wave Retracement at 1.3201. This area has set up as valid downside support and may be a turning point in this market. In the event we see WTI crude oil test the $50.00 handle, a return to the 1.3275-1.3300 area will become probable.

All in all, the U.S. and Canadian economic calendar is fairly quiet until midweek. Wednesday features the Bank of Canada CPI, EIA Crude Oil Stocks, and U.S. Retail Sales. So, be ready for the action to pick up in the USD/CAD beginning in the Tuesday U.S. overnight session.