- USD/CAD consolidates gains from 13-day top, remains sidelined of late.
- Dovish BOC, firmer USD supersede WTI rebound amid risk-off mood.
- Pre-ECB caution could weigh on prices, speech from BOC Governor Macklem, US jobs data eyed as well.
USD/CAD fades post-BOC run-up to 13-day top, seesaws around 1.2690 amid Thursday’s Asian session. In doing so, the Loonie pair ignores recently downbeat oil prices amid sluggish markets.
Despite matching wide market forecasts of inaction, the Bank of Canada (BOC) conveyed economic fears amid the fourth wave of the coronavirus. The same propelled the USD/CAD prices even as firmer WTI tried to discourage the bulls.
WTI oil prices portrayed the first positive day in three on Wednesday amid chatters over delayed production in the gulf. However, the oil benchmark lost the upside momentum following a higher-than-previous inventory data from the American Petroleum Institute (API), -2.88M versus -4.045M. That said, the black gold recently eased to $69.00, down 0.17% intraday. WTI’s latest weakness could be linked to the firmer US dollar and downbeat market sentiment due to the covid fears.
In addition to the dovish BOC and oil prices, the risk-off mood also underpins the US dollar’s safe-haven demand and backs the USD/CAD buyers. Signals concerning further prices hikes and strong jobs market, as recently hinted by the Fed Beige Book and JOLTS Job Openings, joined the coronavirus woes to fade the post-Jackson Hole optimism. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid. On the same line were the doubts over US President Joe Biden’s six-pronged strategy, up for publishing on Thursday, as well as the US covid stimulus package.
Amid these plays, the US 10-year Treasury yields dropped 3.5 basis points (bps) to 1.336% while the S&P 500 Futures drop 0.10% at the latest.
Moving on, the USD/CAD traders are likely to remain inactive ahead of the key European Central Bank (ECB) decision but may react to comments from BOC Governor Tiff Macklem.
Technical analysis
Bulls keep the reins until the quote drops below the 100-day EMA level of 1.2512. However, July’s top around 1.2810 becomes a tough nut to crack before targeting the yearly high near 1.2950.