December 1, 2021 15:29:54

CAD losses have been seen this week chiefly due to declines in crude oil prices. These have steadied overnight but both Brent and WTI still trade below their 200-day SMAs.

Tomorrow’s widely watched OPEC+ meeting takes place amid huge uncertainty over the demand hit from the Omicron variant. Many oil watchers think the cartel may pause production hikes while signalling willingness to cut output if demand does nosedive.

The group has consistently taken a cautious approach since the initial outbreak of the pandemic. The previous meeting agreed an increase in production by 400k barrels per day for December.

CAD/CHF sat on long-term trendline support

The consolidation in this pair during most of last month mainly below the August high at 0.7385 was broken last Friday. The plunge took us prices through several SMAs including the 100-day average at 0.7314 which had been the bottom of the recent range.

The cross is now trading on a support zone which includes long-term trendline support from the pandemic lows in March 2020 and the Fib level (38.2%) of the March ’20 to March ’21 low/high move at 0.7175. The July low is also at 0.7173.

A short-term correction is due. Buyers need a bounce back above 0.7250 to halt the bearish momentum. If we break the trendline, the August low should offer next major support at 0.7088. The halfway point of the March/March move is 0.7066.

CAD/JPY support stops the selloff

This is a major risk on/risk off currency pair, also heavily driven by oil prices. The steady slide from October highs above 93 turned more aggressive last Friday.

Prices plummeted out of the shallow descending channel to the August high at 88.46. Both the 100-day and 200-day SMA have also supported the drop 88.74 and 88.54 respectively.

A rebound should meet initial resistance at the bottom of the bear channel near 89.71. But another breakdown targets first support at this week’s low at 88.02 and then the October low at 87.81.