The Loonie weakened during yesterday’s trading session right after President Trump tweeted his opposition to high oil prices on Monday, putting into focus the problematic situation of the OPEC. Crude oil has recovered recently, as supply cuts have suppressed fears about surging production from the US, but the OPEC now faces a familiar choice. Adding back more supply now will negatively impact the equity market, but maintaining output cuts to keep prices up will mean facing the displeasure of the US president.
Technically speaking, the USD/CAD pair bounced from around a solid support of 1.3125, as mentioned yesterday. Additionally, the “risk-off” environment in North American equity has returned to some extent in today’s trading session. This is creating pressure on the Loonie this morning. However, at the time of this writing, the USD/CAD pair is increasing 0.34 percent (weaker Loonie) and it has just tested a critical resistance level of around 1.3235. If it continues with pressure to the upside, it might test around the 1.3268 level; the first support for today is 1.3184 and, of course, the psychological level is the 1.3200 handle.
On the release side, the consumer price index will be released tomorrow; therefore, there might not be much volatility in the USD/CAD pair this morning.