USD/CAD inter-markets: renewed weakness in oil prices should lift the pair beyond 1.3100 handle

Extending its sharp rebound from Friday's swing low level of 1.2830, the USD/CAD pair has now risen to a nearly 3-week high and is currently hovering around the very important 200-day SMA near 1.3060 region.

The Federal Reserve Chair Janet Yellen's speech at the Jackson Hole symposium followed by hawkish comments from Federal Reserve Vice Chairman Stanley Fischer on Friday fueled speculations that the US central bank will go ahead and raise interest rates, sooner rather than later. Investors somehow seemed unconvinced of a September rate increase, with the CME group's FedWatch tool pricing-in only 21% probability of such an action. The greenback, however, has witnessed sharp rally across the board on increasing prospects of an eventual Fed rate hike by the end of this year. 

Meanwhile, a slide in the US and Canadian 10-years Treasury bond yields have been supportive of the ongoing bullish momentum in the major. However, stability / mild recovery in crude oil prices back above $47.00/barrel mark is the only intrinsic defying the current bullish traction and the pair's up-move has been solely driven by broad based greenback strength, as measured by the overall US Dollar Index. Hence, renewed weakness in oil prices would weigh on the Canadian Dollar and pave way for continuation of the USD/CAD pair's near-term upward trajectory.

Market participants now shift their focus to one of the most important economic indicator from the US, monthly jobs report - popularly known as NFP, for further clarity over the Federal Reserve’s next policy move. 

From technical perspective, a sustained strength above 200-day SMA resistance near 1.3065 should trigger a fresh leg of up-move, assisting the pair to surpass 1.3100 handle and head towards testing monthly high resistance near 1.3175-80 region.