Canadian Dollar to Look Past Saudi Arabia Oil Cuts as WTI Fills a 4% Gap Within a Day

The Canadian dollar has not experienced significant changes following another meeting of the (OPEC).

Over the last 24 hours, the Canadian Dollar demonstrated a decrease in value when compared to the US Dollar. This occurred despite significant developments in the crude oil sector. Specifically, during the previous weekend, the recent OPEC meeting came to a close with Saudi Arabia announcing a reduction in production of approximately 1 million barrels per day (bpd) effective from July onwards. The meeting was notable for its unusual nature as the coalition failed to reach a general consensus regarding necessary output cuts aimed at stimulating oil prices.

Despite an initial 4% increase in WTI at the beginning of the trading week, it subsequently fell to end the session unchanged within 24 hours. The fundamental outlook for crude oil remains challenging due to the impact of global monetary policy tightening on growth, which was manifested in disappointing manufacturing data from China.

It is crucial to consider that a lack of comprehensive coordination among OPEC+ members may pose a challenge for any individual nation attempting to stimulate market growth. This holds significant implications for Canada and the USD/CAD currency pair, given the vital role of oil as a local export. A substantial deviation in the trajectory of commodity prices could have far-reaching consequences on economic outcomes, inflation rates, and the Bank of Canada.

During this period, the Canadian dollar may continue to prioritize monitoring the current trajectory of global economic growth. The economic calendar for the next 24 hours is relatively sparse except for the rate decision by the Reserve Bank of Australia. However, the USD/CAD pairing may be influenced by market sentiment. A negative trading session on Wall Street could potentially result in careful consideration of potential obstacles for the currency moving forward.

Canadian Dollar Technical Analysis

The daily chart of USD/CAD reveals a potential support level at the 1.3412 inflection point. A reversal from this level could result in attention being turned to the declining trendline originating from March, which could serve as a resistance point. Conversely, a decline below the inflection point could reveal an ascending trendline originating from November that may function as support. Therefore, it is possible that consolidation is in store for the Canadian dollar until significant breakouts occur.