USD/CAD prints three-day downtrend towards 1.2600 amid firmer oil, risk-on mood
- USD/CAD rebounds from weekly low, stays mildly offered.
- Oil prices struggle to keep three-day uptrend as headlines concerning China test energy bulls.
- S&P 50 Futures cheers US stimulus hopes, Treasury yields remain depressed.
- Second-tier data eyed as off in China may limit intraday moves, Friday’s jobs report become the key.
USD/CAD pares intraday losses around 1.2630 during Monday’s Asian session. Even so, the quote drops for the third consecutive day with 0.13% intraday losses at the latest.
A pullback in the US Dollar Index (DXY) joins upbeat sentiment, as well as firmer WTI Crude Oil, to underpin the USD/CAD selling of late. That said, the DXY keeps the two-day weakness around 94.08 by the press time whereas the S&P 500 Futures gain 0.40% at the latest. Further, the WTI crude oil prices print 0.13% intraday, taking rounds to $75.65 of late.
US President Joe Biden and House Speaker Nancy Pelosi tried to keep the markets hopeful for a multi-billion dollar worth of the stimulus even as Democrats had to step back from voting on the bill on Thursday amid fears of rejection. Also positive for the risk appetite could be Bloomberg’s piece citing China’s efforts to limit the fallout, signaling it’s willing to prop up healthy developers, homeowners and the real estate market at the expense of global bondholders.
Alternatively, the US criticized China’s activity near Taiwan and is up for conveying the dislike for Beijing’s lack of performance on the phase one trade deal
The USD/CAD sellers gained momentum on Friday as traders consolidates the September month’s gains, the fourth in a row, amid indecision over Fed tapering and rate hike, as well as mixed signals from China. The same helped oil prices to poke multi-month high amid concerns over the demand-supply imbalance.
It should be noted that the US benchmark inflation data and the Fed’s preferred gauge of price pressure both recently renewed the reflation pressure in the world’s largest economy. However, the Fed is mindful of this week’s employment report before announcing the much-awaited taper.
On a short-term basis, US Factory Orders and Canada Building Permits for August may entertain USD/CAD traders but an off in China and a dead news feed can restrict the momentum.
Technical analysis
Although a downside break of a four-month-old ascending trend line, near 1.2650 by the press time, favors USD/CAD bears, a 50-DMA level surrounding 1.2620 and an upward sloping support line from June 23, close to 1.2590, should restrict the quote’s short-term declines.