The FOMC minutes were released today and for the market it was no surprises and steady as she goes from the Hawkish FED. It was clear that they saw the economy booming but a gradual slowdown in the second half of the year, but they also highlighted the fact that trade wars pose an economic risk to the economy and its growth as of late. The USD though had mixed feelings over it as this was as expected and it looked like markets had been betting on a potentially more hawkish set of minutes in the long run. This was strongly reflected in a few currencies but more so in the USDCAD which came under renewed pressure after the release of the minutes. The market will now be focused on unemployment data tomorrow and we could see further falls for the USDCAD.
The USDCAD fall has hit some technical roadblocks as the 100 day moving average is acting as dynamic support at the present. The bears will be a little worried about the potential here as the USDCAD has been bullish in the medium term, and the bulls could come back into the picture at a moment’s notice. If the downward trend were to continue then a fall to support at 1.2960 is likely and also 1.2881 as well. If the bulls are able to continue and Trump politics does not come into play then potentially we could see a rise in the USDCAD to touch on key resistance levels at 1.3041 and also 1.3101 in the long run.
The other big mover and one supplying some weight to the CAD as well, has of course been oil markets which have marched forward on the back of a drop in oil inventories in the US. The most recent reading being -5.84M (-2M exp) which has caused a spike in the markets as a result. Gasoline and Distillate also showed a rise as well, however the market was quick to annoy that factor unlike in recent times. When you couple this in with OPEC looking to hold down production, it seems that we could see a bounce in price but I still feel that 70 dollar barrels of oil are a hard push in the current market climate and with the trade issues at hand.
Looking at oil though from a technical point of view it’s clear to see that the trend line has support the bullish resurgence and oil is now pushing upwards to resistance at 69.38. On the next day trading candle I would look for a bounce here at 67.45 on the support level. But for now it looks like oil is going to continue to strengthen higher if the USD weakness continues.