USD/CAD retreats towards 1.3400 amid firmer Oil price, eyes on Fed’s Powell, BoC’s Macklem
- USD/CAD snaps three-day uptrend as it eases from two-week high.
- Cautious optimism in the market allows WTI crude oil to remain firmer.
- US Dollar retreats amid anxiety over Powell’s speech after the last week’s disappointment from Fed.
- BoC’s Macklem needs to defend the hawkish bias to please bears.
USD/CAD holds lower grounds near the intraday bottom during the first negative daily performance in four, mildly offered near 1.3430 amid early Tuesday. Even so, the Loonie pair remains near the highest levels in 12 days as traders await speeches from Bank of Canada (BoC) Governor Tiff Macklem and Federal Reserve (Fed) Chairman Jerome Powell.
The quote’s latest weakness could be linked to the market’s mildly positive sentiment amid receding recession fears. Adding strength to the pullback moves could be the firmer prices of WTI crude oil, Canada’s key export item.
That said, WTI crude oil rose 0.40% to $75.00 while extending the previous day’s rebound from a two-month low. The black gold’s recovery could be linked to the easing fears of the US economic slowdown and recent positive headlines surrounding the Sino-American ties.
Although the US economic calendar was primarily silent, growth optimism conveyed by US Treasury Secretary Janet Yellen and President Joe Biden seemed to have probed the US Dollar bulls. Even so, hawkish Fed talks seem to put a floor under the US Treasury bond yields and the US Dollar. “The strong labor market probably means ‘we have to do a little more work,’” said Federal Reserve Bank of Atlanta President Raphel Bostic in an interview with Bloomberg.
Elsewhere, a dash on the US diplomatic visit to Beijing and China’s harsh reaction to the US shooting down its balloon by terming it a spying attempt triggered the market’s risk-off mood and propelled the USD/CAD pair the previous day. However, the latest comments from US President Joe Bide appear soothing on the matter as he said, “The balloon incident does not weaken US-China relations.”
While portraying the mood, S&P 500 Futures print mild gains, but the US 10-year Treasury bond struggled for clear directions around 3.63%, after a two-day rebound from the monthly low.
Furthermore, upbeat prints of the Canada Ivey Purchasing Managers Index for January, 60.1 versus 55.2 expected and 49.3 prior, also seem to exert downside pressure on the USD/CAD price.
Looking forward, USD/CAD traders could initially react to the Canadian trade numbers for December. However, speeches from BoC’s Macklem, Fed’s Powell and US President Joe Biden’s State of the Union (SOTU) will be crucial for clear directions.
Technical analysis
Another failure to cross the 50-day Exponential Moving Average (EMA), around 1.3450 by the press time, keeps USD/CAD bears hopeful.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
