The commodities markets’ fears are beginning to affect the West Texas Intermediate (WTI) crude oil as its price is declining.
WTI Oil Moves Southwards
As of this writing, the trading session for the Chicago Mercantile Exchange (CME) WTI futures is declining at around 1%, indicating a bearish trend. It has been on the decline for three successive days now. This current price represents its lowest for about two weeks now and its worst week since October last year.
Surprisingly, crude oil stockpiles surged by 3.7 million barrels as against the expected -3.1 million barrels. The 100-day moving average (ma) shows that the crude oil price is trading at about $67.40.
Last month, the price dipped below the ma price indicated above but managed to rally and close that day’s trading session above that key MA range. A bearishness would be a break and a close below that critical MA level.
However, the USD/CAD trades at over 1.2565, still a rally as it has been for the past two days. Therefore, the energy markets and the Canadian one-dollar coin (Loonie) might benefit from the impending fall season.
Nothing Much On The Fundamental Side
While there wasn’t much fundamental news that happened today, the Canada manufacturing PMI for July and the US factory/orders were released. The released US factor orders data of 1.5% was better than the projected 1.0%. But it declined from its previous value of 2.3%. The Canadian manufacturing purchasing manager index (PMI) also declined slightly from a previous value of 56.5 to 56.2.
Generally, the released data showed that there is a rally in the North American manufacturing sector. US orders are on the rise, while the Canadian PMI remains steady. Even though these figures aren’t important in primary economic analysis, they prove that economic conditions are stable.
However, these metrics can change an instant if the COVID-19 delta variant leads to another total lockdown. China, where the pandemic originated last year, hasn’t recovered as predicted from the COVID-19. Hence, another total lockdown resulting from the COVID-19 delta variant would seriously affect its economy.
The rising cases of the delta variant are already causing a commotion in some regions. For instance, Vietnam, Thailand, and the Philippines have started shutting down hot spots, even though they successfully contained the COVID-19. Below is a brief analysis of the technical indicators which might indicate one or two entry positions.
The Rally Continues For USD/CAD
So far this summer, the USD/CAD is on a bullish trend. However, this wasn’t expected because of the strength of the WTI crude oil. At the moment, the USD/CAD intermediate-trend remains on an uptrend.
USD/CAD chart. Source: TradingView
The critical levels for the remaining part of today’s session are:
Support (1): daily simple moving average, SMA, 1.2529
Support (2): Bollinger MP, 1.2520
Summary: for the remaining trading session, place the USD/CAD buy orders from the 1.2530 level. Using a 1:1 risk: reward strategy and an initial stop loss of 1.2495, this trade should generate 24 pips.