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Crude oil prices and risk appetite are back!

Will today’s themes extend USD/CAD’s downtrend?

Before we talk setups, check out the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

US unemployment claims fall to new pandemic low of 290,000

Stockpiles at the biggest U.S. crude depot are quickly approaching critically low levels. The last time that happened, crude cost more than $100 a barrel

China’s government land sales slumped for a second month as demand from private developers further softened following tighter regulations on fresh borrowing

Japan manufacturing PMI accelerates in October

Japan’s prices rise for first time in 18 months on energy costs

Australia manufacturing PMI climbs from 56.8 to 57.3 in October – Markit

Asian tech shares jump, China property stocks rally as Evergrande makes payment

U.K. consumer confidence drops for third consecutive month in October

Bottlenecks continue to brake German growth, inflation mounts – PMI

Euro zone inflation expectations hit highest level in years

Upcoming Potential Catalysts on the Economic Calendar:

U.K.’s manufacturing and services PMIs at 8:30 pm GMT
Canada’s retail sales numbers at 12:30 pm GMT
U.S. Markit manufacturing and sales PMIs at 1:45 pm GMT
FOMC Chairman Powell to talk “Monetary and financial stability challenges to central banks in the wake of COVID-19” at 3:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

There weren’t a lot of top-tier reports scheduled in the last trading sessions but traders were pretty happy that property developer China Evergrande Group managed to pay interest payments due on September 23.

It also didn’t hurt that Australia’s manufacturing and PMIs printed upside surprises during the Asian session.

All the risk-taking has dragged USD/CAD back down to 1.2335 after hitting an intraweek high near 1.2380 and the 200 SMA on the 1-hour time frame.

Let’s see if U.S. session traders are in the mood for more risk-taking. Eurozone manufacturing and services PMIs are reflecting pockets of weaknesses but commodity-related currencies have been holding up against the dollar so far.

I’m keeping my eyes on USD/CAD as it tests a broken descending channel resistance. If the dollar bounces from the trend line and makes new intraweek highs, then USD/CAD could see a longer-term reversal.

But if today’s themes put USD/CAD firmly back inside its channel, then we can plan for a possible dip back to October’s lows.