The USD/CAD pair declined to the lowest level since September 7 as the price of crude oil rebounded and as investors wait for the latest Canadian and US jobs numbers. The pair declined to 1.2550, which was about 2.7% below the highest point in September.
Crude oil prices
Canada is one of the biggest oil producers in the world. As such, like Norway, the country’s economy does well when the price of crude oil and natural gas rises. And this week, the prices of these commodities has been in a strong bullish trend.
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The price of Brent, the international benchmark, rose to a 7-year high of more than $83. Similarly, Canadian oil and the West Texas Intermediate (WTI) rose to multi-year highs.
This performance happened after OPEC failed to change its mind on oil supplies. The cartel’s members will boost production by about 400k barrels per day per month until the fourth quarter of 2022. Therefore, with oil demand rising, there is a possibility that a demand and supply imbalance will happen.
The next main catalyst for the price of crude oil will be the Canadian and American jobs numbers that will come out on Friday.
Economists expect the data to show that the Canadian economy added 65k jobs in September after adding 90.2k in the previous month. As a result, they see the unemployment rate falling from 7.1% to 6.9%.
Meanwhile, in the United States, analysts expect the data to show that the non-farm payrolls increased from 235k jobs in August to 500k. On Wednesday, data by ADP Institute showed that the economy’s private sector added more than 543k jobs.
And on Thursday, data by the Bureau of Labour Statistics (BLS) showed that initial jobless claims dropped from 364k to 326k.
USD/CAD forecast
The four-hour chart shows that the USD/CAD pair has been in a bearish trend. The pair formed a double-top pattern at around 1.2900 in the past few weeks. It is currently trading at the chin of the double-top pattern.
It has also crashed below the 25-day and 50-day moving averages (MA) while the Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, there is a likelihood that the pair will keep falling ahead and after the latest US and Canadian jobs data.
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