- The price of oil recovered on Tuesday after falling 6% in the previous session.
- The US has announced plans to buy about 3 million barrels of oil.
- The US will release data on employment and GDP.
USD/CAD price analysis points to a recovery in the Canadian dollar as oil prices rise. However, the madman had a terrible month with weak economic data and a massive interest rate cut. At the same time, the dollar paused its growth as market participants waited on the sidelines for key data and the US presidential election.
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Oil prices recovered on Tuesday after falling 6% in the previous session. The recovery came after the US announced plans to buy about 3 million barrels of oil for its strategic oil reserves. Canada is a net exporter of oil, so the rise in oil fuels the craziness.
Still, the currency had a rough month as Canada’s economy worsened. At the same time, inflation eased more than expected, pushing the Bank of Canada to implement a significant rate cut. If the trend continues, the BoC will remain the most dovish central bank of its peers.
Meanwhile, the Fed took a more cautious tone. Policymakers are less dovish after a series of better-than-expected economic reports. Moreover, inflation rose more than expected in September. Accordingly, markets are pricing in a higher chance of a small rate cut in November.
However, incoming data may change this perspective. This week, the US will release data on employment and GDP. Economists expect growth of 3.0% in the third quarter. Meanwhile, job growth could slow from the previous month. Upbeat data will reduce the likelihood of a rate cut, while worse data will firm bets on a rate cut.
USD/CAD Key Events Today
- CB Consumer Confidence
- JOLTS Job Opens
- BOC Gov Macklem speaks
USD/CAD Technical Price Analysis: Bearish RSI Divergence
From the technical side, USD/CAD the price pulls back after reaching the resistance level at 1.3901. However, the bullish bias remains intact as the price is trading above the 30-SMA with the RSI above 50. USD/CAD has remained bullish since the bulls took control at the bottom of the 4-hour chart.
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However, the momentum started to decline after the uptrend reached the resistance level of 1.3825. The RSI has made a bearish divergence that could lead to a reversal. However, the bulls could push a new high above 1.3901 if the SMA remains firm.
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