USD/CAD seesaws around 1.2500 amid subdued markets, choppy oil prices
|- USD/CAD bears take a breather around weekly low after two-day downtrend.
- Lack of major data/events confuses traders amid previously mixed catalysts, USD pullback.
- Oil prints mild intraday losses as updates concerning China, covid and US stimulus repeat old saying.
USD/CAD tracks sluggish Asian market conditions on Thursday while taking rounds to 1.2500. The Loonie pair dropped during the last two days to refresh the week’s low before bouncing off 1.2489 on Wednesday.
The broad US dollar weakness could be cited as the key catalyst for the USD/CAD pair’s recent losses whereas the WTI crude oil’s rebound exerts an additional downside burden on the quote. However, the recently indecisive markets amid an absence of news from China, the US Senate and relating to the virus seem to probe the pair sellers.
Although Bloomberg rolled out the piece signaling US Treasury Secretary Janet Yellen’s first visit, at this diplomatic position, to China, investors failed to welcome the upbeat news amid the covid woes in China and the US. Also on the positive side were chatters concerning the relation of the Aussie conditions to the COVID-19 as the latest figures ease and the government pushes hard for the vaccinations. Additionally, US President Joe Biden’s indirect rejection of the challenges to budget talks, earlier raised by Republicans, was also ignored as it’s a long way before anything concrete develops.
Amid these plays, S&P 500 Futures remain directionless, mildly offered, whereas the US 10-year Treasury yields regain upside momentum towards 1.35% by the press time.
The US Dollar Index (DXY) rose to the highest levels since early April before easing from 93.19 on the US Consumer Price Index (CPI) data as it backs the Federal Reserve (Fed) in saying that the inflation hike is “transitory”. The headline CPI remained unchanged at 5.4% YoY versus 5.3% forecast whereas the core CPI, ex Food & Energy, eased to 4.3% from 4.5% previous readouts. Fed Reserve Bank of Kansas City President Esther George said, “the time has come to dial back the settings.” It should be noted, however, that the policymaker ruled out rate hikes while also signaling that the road ahead to policy normalization “is likely to be a long and bumpy.”
Oil prices fail to praise a lesser-than-expected draw in the weekly inventory reports from the US Energy Information Administration. The reason could be linked to the US Senate’s passage of infrastructure spending plan and upbeat equities.
Looking forward, a light calendar and a lack of major data/events may keep troubling momentum traders but the US Producer Price Index (PPI) for July and the Weekly Jobless Claims, coupled with Fedspeak, may offer intermediate hints.
Technical analysis
Multiple failures to cross 200-DMA, near 1.2570, direct USD/CAD to an ascending support line from early July, around 1.2480.
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