Wednesday brought release of the weekly EIA crude oil inventories report. The figure came in at -7.195 million barrels, well below expectations of -0.710 million. Next week is likely to bring another drop in supplies due to this weekend’s holiday travel demand. September WTI crude has reacted positively to the news, trading above $40.00. Subsequently, the USD/CAD is positioned to close the session beneath 1.3600.

On the political front, President Trump spoke this morning at the “Spirit of America” celebration. At the event, Trump lauded the rapid recovery in U.S. employment and warned of a “1929 market crash” if he is not re-elected in November. 

$40.00 crude, shrinking oil supplies, and a rebound in employment figures are all good news for President Trump. However, polling data and betting odds now have Democratic contender Joe Biden installed as a solid favorite to win the Presidency. Over at predictit.org, Biden is being given a 61% chance of victory (39% for Trump). The polls at Real Clear Politics have Biden with a 12-point lead ― a 180-degree shift from February.

Let’s dig into the USD/CAD weekly technicals and see if we can spot a trade or two.

USD/CAD: Weekly Technicals

The chart below gives us a clear look at the “L” formation that has developed for the USD/CAD on the weekly timeframe. This pattern is a sign of compression and a noncommittal market.

Bottom Line: So, which way is the USD/CAD going to move? At this point, it’s anyone’s guess. But, given that crude oil is likely to rise over the coming summer months, a bearish breakout is definitely a possibility.

Until elected, I’ll have buy orders queued up from 1.3335. With an initial stop at 1.3274, this trade produces 61 ticks on a standard 1:1 risk vs reward ratio.