USD/CAD seesaws around mid-1.3700s as oil pokes key resistance, focus on US CPI, FOMC Minutes

USD/CAD picks up bids to refresh intraday high around 1.3750 during the early Asian session on Monday. The Loonie pair’s latest gains could be linked to a pullback in oil prices, Canada’s main export item, as well as the hawkish expectations from the US Federal Reserve (Fed).

WTI crude oil posted the biggest weekly gains since February after the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, agreed to lower oil output by 2 million barrels per day. Also favoring the black gold could be the recent escalation in the Russia-Ukraine tussles after an explosion destroyed a part of the bridge in Crimea which is crucial for Russia's war supplies. However, the oil benchmark eased from the six-week high on Friday while consolidating recent gains amid the firmer US dollar, taking rounds to $91.50 by the press time.

That said, the US Dollar Index (DXY) rose during the last three days while reversing the previous weekly pullback from the 20-year high as markets priced in the 75 basis points (bps) of rate hike from the Fed. Behind the hawkish Fed bets could be the firmer US jobs report and upbeat comments from the policymakers that suggest further rate increases before the pause.

The US Dollar Index (DXY) cheered Friday’s jobs report for September as the headline Nonfarm Payrolls (NFP) rose to 265K versus 250K expected. Also adding strength to the greenback gauge was an unexpected fall in the Unemployment Rate to 3.5% compared to forecasts suggesting no change in the 3.7% prior.

On the other hand, Canada’s Net Change in Employment rose to 21.1K in September from -39.7K prior, versus the 20K expected. Further, the Unemployment Rate surprised markets with 5.2% figure compared to 5.4% market consensus and prior.

Against this backdrop, the US Treasury yields regain upside momentum whereas the equities witnessed the red. It should be noted that the S&P 500 Futures print mild losses by the press time.

Moving on, a holiday in the US and Canada may restrict intraday moves of the USD/CAD pair. However, the broad strength of the US dollar and the market’s risk-off mood may keep the buyers hopeful ahead of Wednesday’s Federal Open Market Committee (FOMC) Minutes and Thursday’s US Consumer Price Index (CPI).

Technical analysis

Unless breaking a one-month-old ascending trend line, at 1.3645 by the press time, the USD/CAD bears may not take the risk of entry.