USD/CAD refreshes monthly top amid WTI pullback, eyes on BOC’s Poloz
|- USD/CAD registers a three-day winning streak while extending the recovery from multi-month lows.
- US-Iran de-escalation, higher than expected inventories weigh on Oil prices, main exports to Canada.
- Traders will also watch for Canadian housing data, Fedspeak and US jobless claims as additional catalysts.
USD/CAD takes the bids to 1.3040, following the high of 1.3049, during early Thursday. The quote extends the previous pullback mainly because of the weakness in Canada’s main export item crude and mixed catalysts concerning the commodity giant China.
Not only weaker than expected Chinese inflation numbers for December but questions surrounding the Asian nation’s future growth and trade deal with the US also seem to act as negative catalysts for Beijing. On the contrary, the World Bank’s expectations of recovery in the Chinese economy confront Moody’s negative outlook for Asia-Pacific sovereigns and offer a mixed picture for the world’s second-largest economy.
The pair also benefits from oil’s declines amid receding odds of the US-Iran war. Further, Wednesday’s higher than forecast Energy Information Administration (EIA) Crude Oil Stocks Change, to 1.164M versus -3.572M expected, added downside pressure on the energy benchmark.
As per the latest headlines, the US is ready to have serious negotiations with Iran' to prevent escalation without any preconditions.
Markets will now focus on the Canadian Housing Starts and Building Permits ahead of Bank of Canada’s (BOC) Governor Stephen Poloz’s speech the Greater Vancouver Board of Trade's Economic Outlook Forum. While housing figures are expected to post welcome numbers, a sustained hawkish tone by the BOC’s Poloz could renew the Canadian dollar’s strength.
On the other hand, the US weekly jobless claims and speeches from the US Federal Reserve (Fed) policymakers will be in focus. However, nothing will dim the charm of US-Iran and US-China headlines as the key drivers.
Technical Analysis
Prices need to provide a daily close beyond October 29 low of 1.3042 in order to extend the latest run-up towards December 18 bottom surrounding 1.3100. In absence of which, sellers can again target 1.3000 and the latest low near 1.2940/45.
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