Two trades to watch: FTSE, USD/CAD

FTSE tumbles as COVID fear return. USD/CAD snaps three day losing streak as oil plummets.

Charts (6)

FTSE tumbles as COVID fear return

The FTSE, along with its European peers, are tumbling lower on Friday as COVID fears return. A new variant which has multi- mutations and could be resistant to current vaccinations has been found in South Africa. It is being described as the most significant variation of COVID seen yet.

Riskier assets such as stocks fell sharply overnight and the sell off is expected to continue into the European session.

Airlines and travel and tourism stocks are expected to fall sharply. Commodities are taking a hit which is set to hit resource stocks on the index too.

COVID headlines are expected to drive the index and thin volumes over Thanksgiving could result is large moves..

Learn more about the FTSE

Learn more about the FTSE

Where next for the FTSE?

The FTSE has been edging lower since reaching a post pandemic high of 7406 mid-November. The FTSE has dropped sharply lower today. The breakthrough the 50 sma, the weekly has negated the near term uptrend.

The RSI is supportive of further downside whilst it remains out of oversold territory.

Sellers are looking for a move towards the 200 sma at 7035. A move below 6950 the October low could see the selloff accelerate to 6820 the September.

FTSE chart

USD/CAD snaps three day losing streak as oil plummets

USD/CAD is pushing lower as oil prices tank. Oil trades down 4% on supply glut fears as the U.S and other oil consuming countries plan to release strategic reserves. OPEC have warned of a glut next year and the Economic Commission Board warned that the 400,000 bpd surplus expected in December could grow to 2.3 million bpd in Q1 2022.

On the other side of the pair USD is driving higher on safe haven flows as COVID fears are unnerving investors. The discovery of the new, potentially vaccine resistant strain in South Africa has seen riskier assets fall out of favour and safe haven demand surge.

There is no data due from US or Canada so oil prices, market sentiment and COVID headlines are likely to be the main focus for the pair.

When to trade forex?

When to trade forex?

Where next for USD/CAD?

USD/CAD is extending its rebound from 1.2280 in late October. After slipping back at the start of the week the pair has surged higher taking out resistance at 1.2740 the weekly high, bringing 1.2770 the September 29 high into play and 1.2896 the September high.

The RSI is supportive of further upside whilst it remains out of overbought territory.

On the flip side, support can be seen at 1.2640 yesterday’s low ahead of 1.26 round number and 50 sma. A fall below here could negate the near term up trend.

 

 

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