Markets Flat After Flurry Of Biden Executive Orders
Judging by Joe Biden’s first Executive Orders, U.S. crude oil production is likely to take a hit in the coming years.
The Biden administration has wasted no time getting to work, enacting 17 Executive Orders since yesterday’s inauguration. U.S. stocks don’t seem to care one way or the other. At the halfway point of the Wall Street session, the DJIA DOW (-47), S&P 500 SPX (-3), and NASDAQ (-50) are largely neutral.
Joe Biden has been busy, launching efforts to roll back many Trump-era policies. Since being sworn in Wednesday, Biden has signed several high-profile Executive Orders. Here is what they do:
- Stops U.S. withdrawal from the World Health Organization
- Rejoins the Paris climate accord, to be official in 30 days
- Cancels the Keystone XL pipeline, orders environmental review
- Requires non-citizens to be included in the Census
- Lifts restrictions on US immigration from seven Muslim-majority countries
- Halts construction of the U.S./Mexico border wall
As far as the markets go, energies are to be the most impacted by this group of directives. Ceasing the Keystone XL pipeline and rejoining the Paris climate agreement will put pressure on crude oil and natural gas pricing. As of now, WTI crude is trading in the area of 53.00 and Henry Hub natural gas is just below 2.500.
Biden’s Executive Orders are little surprise and have had a negligible influence on short-term price action. Let’s take a look at how the USD/CAD has reacted to the news.
USD/CAD Consolidates Following Biden Executive Orders
This week’s big forex mover has been the USD/CAD. Rates have put in a hard test of the 1.2600 handle, posting multi-year lows.
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Here are two numbers to watch for the Loonie going into the weekend break:
- Resistance(1): 38% Current Wave Retracement, 1.2669
- Support(1): Key Number, 1.2600
Bottom Line: Judging by Joe Biden’s climate-facing Executive Orders, U.S. crude oil production is likely to take a hit in the coming years. If so, crude prices will rise and USD/CAD will continue to fall. Given the current fundamentals, a bearish long-term outlook is justifiable for the USD/CAD.
If we see rates pull back, a sell from the 38% Current Wave Retracement (1.2669) may come into play. Until Friday’s close, I’ll have sell orders queued up from 1.2664. With an initial stop loss at 1.2714, this trade produces 50 pips on a standard 1:1 risk vs reward ratio.
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