USD/CAD is holding up while the dollar sells off against everything else

• USD/CAD is only 0.15% lower on the session while the greenback struggles more everywhere else.
• The weaker oil price and Canada is highly exposed to the US issues. 

Fundamental backdrop

USD/CAD is only 0.15% lower but the USD is hitting lows against all of the other major G6 currencies on Monday. The EUR is the outperformer once again with EUR/USD trading 0.79% higher at the start of the week. The dollar has many issues at the moment, the US-China situation is at a critical point although there was no real noteworthy information this weekend. The tit for tat embassy closures last week have put tensions at a recent high and Trump is doing his best to get Huawei banned all over the world. Elsewhere, the COVID-19 pandemic is still not under control in America. The death rate has been marginally better but once again the weekend counting could be a little suspect and it is better to wait for the data in the middle of the week for a true reflection of the situation. Lastly, it is an election year and Trump is not the favourite to win. Biden, who is odds on at the moment is not the markets prefered choice and this could mean some more weakness is being priced in. 

Oil has been on the back foot today as WTI is 0.79% lower. If the economies start to open up more in North America this could change but for now, there is no end in sight. OPEC have maintained cuts leading into August and September 

 Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said at an OPEC+ panel meeting on Wednesday. 

“As we move to the next phase of the agreement the extra supply resulting from the scheduled easing of production cut will be consumed as demand continues on its recovery path,” the Saudi minister said in an interview with Reuters. The agreement notes that in August and September the group will taper the cuts by 2 million barrels per day. 

This week the market will also get the latest GDP numbers from Canada. This could be useful to gauge if the country is on the right path in terms of rebounding from the coronavirus pandemic. Analyst expectations are at roughly 3.5% vs last months massive -11.6% decline.

USD/CAD 4-hour chart

The chart below shows a firm support level at around 1,3364. If there is to be some oil strength in the coming session then maybe the pair could break below the level but for now, it seems good to hold. On the upside, the blue resistance zone at 1.35 could keep a cap on any recovery to the upside. 

The indicators are looking bearish at the moment. The Relative Strength Index is well under the 50 line and nearly in the oversold area. The MACD histogram is green but the signal lines are far from being close to crossing the zero level. 

Additional levels