USD/CAD holds onto bearish bias below 1.3400 as Oil grinds higher, US Dollar retreats ahead of PMI, BoC
- USD/CAD fades bounce off intraday low during four-day downtrend.
- Oil price struggles to defend gains amid mixed concerns.
- Hawkish hopes of Bank of Canada, talks surrounding Fed policy pivot keep sellers hopeful.
- Preliminary readings of US S&P Global PMIs for January will be crucial ahead of BoC interest rate decision.
USD/CAD slides to 1.3350 as bears keep the reins for the fourth consecutive day heading into Tuesday’s European session.
In doing so, the Loonie pair cheers the broad US Dollar weakness, as well as a slow grind to the north in prices of Canada’s key export item, namely WTI crude oil, ahead of monthly activity data from the US. It’s worth noting that Wednesday’s Bank of Canada (BoC) monetary policy decision will be eyed closely by the pair traders amid talks surrounding a policy pivot.
That said, WTI crude oil pares intraday gains near $81.70 after a softer start to the week. Even so, the black gold remains around the seven-week high amid hopes of China-linked demand. It should be observed that the latest talks surrounding the US readiness to use Special Petroleum Reserves (SPR) in the need weigh on the quote.
Elsewhere, the struggles between the US and China surrounding the Beijing based companies’ ties to the Russian war effort join the fears of economic recession to weigh on the market sentiment and probe USD/CAD bears. Though, mixed figures of the Canadian housing data published the previous day joined downbeat US Conference Board’s Leading Index put a floor under the prices.
On a broader front, the absence of Fed policymakers’ talks ahead of February meeting and the Lunar New Year holidays in China restricts the market moves, as well as limit USD/CAD pair’s momentum.
Amid these plays, the S&P 500 Futures resist following Wall Street’s gains while retreating from the six-week high marked the previous day, making rounds to 4,030-35 at the latest. On the same line, the US 10-year and two-year Treasury bond yields snap three-day recovery moves by struggling around 3.51% and 4.21% by the press time.
In order to break the monotony, USD/CAD traders may take clues from the first readings of January’s S&P Global PMIs and the fourth-quarter (Q4) Gross Domestic Product (GDP). However, major attention will be given to Wednesday’s BoC where the Canadian central bank is up for 0.25% rate hike. More importantly, hints for further rate hikes will be closely observed to determine further downside bias for the Loonie pair.
Technical analysis
Having failed to cross the 100-DMA, around 1.3515 by the press time, the USD/CAD bears poke a 10-week-old support line, near 1.3340 at the latest, to confirm further downside of the Loonie pair.