USD/CAD Approaches Key 38% Retracement Level
Shain Vernier • 1 min read
The story of the day continues to be the meltdown in WTI crude oil USOIL (-5.29%). One of the key results has been a steep rally in the USD/CAD (+0.59%), the first such bullish breakout since late-February. Now, rates are on the cusp of a key 38% Fibonacci resistance level. Will bidders be able to change the long-term bearish trajectory of the Loonie?
On the economic news front, today brought the weekly U.S. jobless claims numbers. Here are the highlights:
Event Actual Projected Previous
Continuing Jobless Claims 4.124M 4.070M 4.142M
Initial Jobless Claims 770K 700K 725K
As a whole, this set of stats signals an uptick in unemployment. However, Canada’s ADP Nonfarm Employment Change came in at -100,800, well above the previous release (-65,800). So, for the USD/CAD, this morning’s jobs numbers evened each other out.
One bit of data worthy of note is today’s Philly Fed Manufacturing Index (March). Figures came in at 51.8, more than doubling projections (23.0) and the previous release (23.1). This is a historically strong report and an extremely positive sign regarding the COVID-19 recovery.
USD/CAD Surges As WTI Plunges
For the first time in more than a week, the USD/CAD is in a position to close definitively in the green. Rates are above 1.2460 and driving toward 1.2500.
As we approach the end of the week, there is one level on my radar for the Loonie:
- Resistance(1): 38% Current Wave Retracement, 1.2507
Bottom Line: As long as the Spike Low (1.2365) is the bottom of the USD/CAD market, I’ll have sell orders in the queue from 1.2494. With an initial stop loss at 1.2529, this trade produces 25 pips on a slightly sub-1:1 risk vs reward ratio.