USD/CAD surpasses 1.2800 as Germany's refusal to ban Russian oil imports drags WTI

The USD/CAD pair has witnessed a firmer rally on Monday as the West Texas Intermediate (WTI) oil pares gains on the intraday bullish opening gap. The pair has activated buyers after overstepping 1.2800 and is aiming to recapture February 24 high at 1.2876.

Earlier, WTI was skyrocketing on expected prohibition of Russian oil imports to the US and its allies. US President Joe Biden initially decided to isolate the Kremlin on its invasion of Ukraine and a ban on the import of oil from Russia. It was likely that other allies would follow the footprints of the US. However, Germany, being the biggest buyer of Russian crude oil, rejected plans to ban energy imports.

The statement from German Chancellor Olaf Scholz that “Germany is accelerating its plans to expand its use of alternative energy sources but cannot halt imports of Russian energy overnight” has barricaded the rally in the oil prices. This has strengthened the greenback against the loonie.

Adding to the oil plunge, the loonie has been hammered amid broader risk-aversion in the market. The US dollar index (DXY) has climbed above 99.00 on rising bets over a significant hawkish stance in interest rate decision by the Federal Reserve (Fed) in its March monetary policy meeting.

Although the headlines from the Russia-Ukraine war will dictate the likely action in the pair, investors will also focus on the US Consumer Price Index (CPI) data, which is due on Thursday. While Canada’s docket will report the Employment Change data on Friday.