USD/CAD steady above 1.29 as crude oil plunges more than 3%

• Bahrain finds its biggest oil field since 1932.
• Crude oil plummets more than 3% to the $63 handle.

The USD/CAD is trading at around 1.2917 as Bahrain announced that it made its largest oil discovery since 1932. The CAD is a commodity-linked currency which heavily relies on oil prices. 

Crude oil prices plunged more than 3% on Monday as Bahrain said it discovered an oil field which contained "highly significant quantities of oil and gas.” which is going to “dwarf Bahrain's current reserves.” According to Bahrain’s oil minister, Shaikh Mohamed bin Khalifa Al Khalifa. 

In the Gulf, Bahrain is the smallest oil-producing country with proven reserves of 125 million barrels versus 266 billion seen in Saudi Arabia, according to the US Energy Information Administration (EIA). Bahrain is not an OPEC member (Organization of the Petroleum Exporting Countries) but it has joined the OPEC and non-OPEC countries in an agreement to cut oil production to lift oil prices by rebalancing the market.

The discovery of the oil field is seen as additional oil supply in the market and the oil prices sold-off, further supporting the USD/CAD currency pair. 

Earlier in the day, US PMI data came out mixed. However, the Markit PMI reading came in at its highest point in three-year, supporting the US Dollar.   

USD/CAD daily chart

The USD/CAD is trading in a range between 1.28 and 1.2940 above the 50, 100 and 200-period simple moving averages. If the bulls break above 1.2940 resistance the next scaling point is seen at 1.29 and 1.30 previous swing high and psychological marks. On the flip side, if the bears break the 1.28 support, the next scaling point is seen at the 1.27 psychological level which is also home to the 50 and 100-period simple moving average.