- USD/CAD remains pressured around intraday low, marks one more attack on 200-DMA, seven-month-old support line.
- WTI crude oil reverses the previous day’s pullback from eight-year top.
- Market sentiment dwindles, yields stay firmer ahead of second-tier US/Canada data.
- US stimulus, Fed and yields are the keywords to search for near-term direction.
USD/CAD refreshes intraday low to 1.2493, down 0.07% on a day ahead of Thursday’s European session.
In doing so, the Loonie pair drops for the fourth consecutive day as traders struggle with mixed catalysts.
On the positive side, firmer prices of Canada’s key export item WTI crude oil and softer US dollar exert downside pressure on the USD/CAD. However, firmer US Treasury yields and challenges to market sentiment seem to keep the buyers hopeful.
WTI crude oil grinds higher around the intraday top of $85.73, up 0.35% on a day, while consolidating the previous day’s pullback from May 2014 levels. The black gold cheers increasing geopolitical tension concerning Russia and Iran, not to forget North Korea, to print the latest gains. Earlier in the day, US President Joe Biden warned Russia not to invade Ukraine.
Elsewhere, US Senate Democrats witnessed another disappointment from Joe Manchin and Kyrsten Sinema as they surprised colleges by voting against a bid to overturn filibuster rule and advance a voting rights bill that could have eased the path for BBB aid package. With this market’s sentiment turns sour and favors US Treasury yields. Additionally, Biden’s praise of Fed Chairman Powell’s style also back the Fed hawks and underpin the bond coupons’ rebound.
Furthermore, the People’s Bank of China’s (PBOC) rate cut and hopes that Democrats will get the much-awaited stimulus rolling, keep market players hopeful, exerting downside pressure on the USD/CAD prices.
It should be noted that the US 10-year Treasury yields rose three basis points (bps) to 1.856% whereas the S&P 500 Futures print mild gains at the latest.
Moving on, Canada ADP Employment Change for December and Employment Insurance Beneficiaries Change for November will precede US Jobless Claims, Philadelphia Fed Manufacturing Survey for January and December’s Existing Home Sales to decorate the calendar.
Technical analysis
In addition to a daily closing below the 200-DMA level of 1.2500, a successful break of an ascending support line from June 01, near 1.2470, becomes necessary for the USD/CAD sellers to keep reins.
Alternatively, the corrective pullback may initially aim for the latest swing high near 1.2570 but USD/CAD buyers are less likely to take an interest until the quote stays below 1.2630.
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