CAD takes spotlight on refinery issues
The woes in America continue to dominate global trading headlines, as the hurricane has been now downgraded to a tropical storm. Obviously this is good news for the affected people, but markets have been quick to jump in on the action and none more so than oil markets at present. With the storm causing refineries to close it's likely we will see a build in oil surpluses and in private and public data due out this week, and the week following after. One of the major benefactors of this however has been the USDCAD with its strong relationship with oil markets. Obviously, also the Canadian economy has been somewhat positive but its relationship the USD has been very weak with fears of NAFTA and the tariffs that could be imposed on the Canadian economy.
The USDCAD has jumped on today's news and pushed up to resistance at 1.2553 and has paused. With the storm currently subsiding it's likely the USDCAD may pause here or even let the bears back into the market, if that is the case then I would be watching for a very solid head and shoulders pattern to form and the continuation of bearish markets. In the event that it did continue lower support could be found at 1.2429. If the bulls do take hold I would be quite cautious how much movement they've got as the next level of resistance is found at 1.2757 and the 50 day moving average is trending lower and is likely to intersect putting pressure on any bullish movements. Either way CAD traders are likely to see some serious volatility over the coming 24 hours as the storm subsides and as oil data has the potential to cause havoc on the markets.
Gold markets continue to experience a major amount of volatility at present as it swung 20 dollars today. Yesterday saw a strong jump for the bulls as traders struck on a slow day, but with the storm letting up the bears have swung back into the markets. Tomorrow will be strong day for gold trading as US GDP data will be out, and it's expected to show a slight rise to 2.7%, if we do see negative data then I would expect to see the bulls to take control and lead the market higher. If the data is positive expect to see it swing lower.
In the event it does swing lower then I would be targeting the key level at 1295 which is likely to be a very hard level to push through. At the same time the 20 day moving average is also a key level of support as can be seen above, and I would expect to hold, especially if combined with the 1295 level. In the event we do get to push higher, then 1313 and 1338 are likely to be important targets for traders and I would only expect to see a higher jump on weaker US GDP data in the next 24 hours.