Chart of the day: USDCAD back at resistance. Is this time different?
USDCAD is testing resistance once again at 1.3350. This time it feels the CAD has less conviction to strengthen and we ask: is this time different?
Considering the global virus panic, we must consider the CAD’s role as a petrocurrency. WTI crude is trading at two-year lows as the coronavirus spreads across the world, threatening global production and freedom of movement. Further travel restrictions and disruption to business, and oil falls further.
In a press conference this morning, Trump announced they would consider restricting travel from other virus hotspots, like Italy, if necessary and that plans were in place to quarantine US cities should the need arise. The concern is there, and should the virus make its way to the US, that’s bad news for the USD.
As long as the US withstands an outbreak of the virus, the USD should continue to hold. The US so far has confirmed 60 cases of the virus, and Canada 12.
Vol levels in USDCAD have picked up lately with a 5-day average true range (ATR) of 81 points, the highest of the year - although this is coming off all time lows.
The 1.3350 level is strong resistance now. A break above this level on the daily close could be the precursor to a strong move higher.
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