- USD/CAD looks to retest multi-day highs, as weaker WTI lends support.
- BOC reduces bond-buying, delivers optimism on the economy.
- Powell downs the US dollar, all eyes now on US/Canadian data and Powell 2.0.
USD/CAD is heading back towards the multi-day highs of 1.2549, bouncing off a brief dip to near the 1.2520 region.
A renewed selling wave seen in the US dollar across the curve dragged the major lower while the European traders reacted to the hawkish Bank of Canada (BOC) decision, as they hit their desks, fuelling the latest leg down in USD/CAD.
However, the recovery momentum remains intact amid falling WTI prices, especially in light of the latest Reuters reports, citing that Saudi Arabia and the United Arab Emirates had reached a compromise that should lead to an OPEC+ deal on oil output hike.
On Wednesday, the currency pair staged a blistering recovery rally after falling to five-day lows of 1.2429 on BOC’s taper announcement. The central bank n tapering its bond purchases to CAD2 billion per week in a sign of optimism about the pace of the economic recovery.
The downside in the spot was also aggravated by Fed Chair Jerome Powell’s dovish remarks, as he said that paring back of stimulus support is still distant, given that the economic progress is not there yet. Powell’s testimony triggered a fresh sell-off in the US dollar alongside the Treasury yields.
Looking ahead, all eyes remain on the US and Canadian jobs data ahead of Powell’s day 2 of the testimony. Meanwhile, the covid updates and oil price action will be also closely followed for fresh trading opportunities in the CAD pair.