USD/CAD steadies above 1.2800 as firmer USD battles strong oil ahead of Fed Minutes
- USD/CAD remains sidelined after bouncing three-week low, recently off daily lows.
- US dollar tracks rebound in yields, cautious sentiment to pause two-day downtrend.
- Oil prices recover amid fresh geopolitical fears emanating from China, North Korea.
- US Durable Goods Orders, EIA inventories also become important for fresh directions.
USD/CAD picks up bids from intraday low as buyers defend the previous day’s rebound from a three-week low during early Wednesday morning in Asia. Even so, the Loonie pair remains mostly sidelined while rising to 1.2830 by the press time.
The mixed play of the firmer US dollar and upbeat price of Canada’s key export WTI crude oil seems to challenge the USD/CAD traders of late.
Talking about the greenback, the US Dollar Index (DXY) rises 0.21% intraday while bouncing off a four-week low to regain the 102.00 threshold. The DXY rebound tracks the US 10-year Treasury yields, bouncing off the monthly low while rising 0.8 basis points (bps) to 2.767%. Underlying the rebound in the yields could be the risk-negative headlines from China and North Korea, as well as the market’s preparations for the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior, as well as the Federal Open Market Committee (FOMC) Minutes.
Read: FOMC May Minutes Preview: Will the Fed have to sell MBS?
On the other hand, geopolitical fears from North Korea’s missile launches and China’s readiness for a military drill near the border of Taiwan, contradicting the US wish to defend Taipei, seem to help the crude oil prices amid fears of a supply crunch. It should be noted that the previously dominant supply crunch catalysts like the Russia-Ukraine war and China’s covid-led lockdown also help the black gold prices. That said, WTI crude oil prices rise 0.65% to $110.00 at the latest.
Looking forward, the Weekly prints of the official inventory data from the US Energy Information Administration (EIA), expected -0.69M versus -3.394M prior, also act as the key catalyst for the USD/CAD prices, in addition to what already mentioned above.
Technical analysis
USD/CAD remains mildly bid between a one-month-old ascending support line and the 21-DMA, respectively around 1.2770 and 1.2870.
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.
