USD/CAD remains on a back foot amid WTI rise/trade tension, all eyes China’s data dump

• Storm Barry and the UK-Iran geopolitics are in the spotlight supporting the WTI upside.
• Doubts over the OPEC+ production, Fed’s future monetary policy, and the US-China trade talks remain in play.
• China’s headline Retail Sales, Industrial Production and Gross Domestic Product (GDP) will offer immediate direction to the commodity-linked currency pair.

Despite bouncing off 1.3018 on Friday, USD/CAD refrains from recovering as it takes the rounds to 1.3030 during early Monday morning in Asia.

Among the key catalysts behind the Loonie pair’s downpour, the oil price decline and dovish Fed can be considered holding the top positions.

Crude oil, Canada’s largest export earner, has been on a rise off-late as not only the US-Iran geopolitical tension but the news that the British oil tanker was also stopped by the Iranian militants in the Persian Gulf also added strength into the energy benchmark. Recently, Iranian President Hassan Rouhani recently commented that Iran is ready to talk with the US on condition of removing sanctions and returning to the 2015 Nuclear Deal. Further, the US tropical season witnesses the damages done through the storm Barry which the Reuters says could go as long as 73% of the US offshore oil production.

Providing additional strength to the downside momentum are the latest round of expectations, driven by the Federal Reserve policymakers, that the US is on its way towards successive rate cuts.

Weighing on the Canadian Dollar (CAD) are reports that the macro production efforts by the Organization of the Petroleum Exporting Countries (OPEC) and key allies, mostly known as the OPEC+, are likely being compromised by the increased output of non-OPEC members weigh on the oil prices. Also capping the prices could be the trade tussle between the US and China. None of the world’s top two economies wants to give away on any of their previous biases and hold back the much-awaited deal despite breaking the deadlock after the G20.

Given the CAD being a commodity-linked currency, China’s upcoming key data will provide a fresh impulse to the quote whereas the US second-tier manufacturing gauge, namely the New York Empire State Manufacturing Index, could offer additional clues afterward.

Technical Analysis

Unless breaking 1.3000 round-figure, followed by the late-October 2018 low near 1.2970, oversold levels of 14-day relative strength index (RSI) can keep counter-trend traders to aim for 1.3145/50 resistance area. Though, 1.3090 may act as an immediate upside barrier to the pair.