USD/CAD pares recent gains above 1.2700 on firm oil prices
- USD/CAD snaps two-day uptrend, retreats from one-week high.
- Oil prices stay firmer on geopolitical fears, struggling USD.
- Canada employment report contrasts US job numbers for January.
- Light calendar keeps risk catalysts in the driver’s seat ahead of Wednesday’s speech from BOC’s Macklem, Thursday’s US CPI.
USD/CAD takes offers to refresh intraday low around 1.2725, down 0.23% on a day during the late Asian session on Monday. In doing so, the loonie pair consolidates the recent gains while extending the previous day’s pullback from a one-week high.
Firmer oil prices and a pullback in the US Treasury yields could be linked to the USD/CAD pair’s latest losses. It’s worth noting that WTI crude oil is Canada’s main export item and is on the north-run since early December 2021, recently up 0.14% intraday around $91.15, near the fresh eight-year high flashed on Friday.
Even so, downbeat employment data from Canada contradicts firmer US jobs report and keeps the pair buyers hopeful. On the same line are escalating concerns over the Fed’s 0.50% rate hike in March. It should be observed that Bank of Canada (BOC) Governor Tiff Macklem has shown discomfort with the rising inflation, which in turn highlights Wednesday’s speech from BOC’s Macklem as the key catalyst for USD/CAD bears.
Additionally, Thursday’s US Consumer Price Index (CPI) for January and chatters around the Russia-Ukraine war are also important for short-term USD/CAD moves.
That said, a sluggish start to the week allowed the US Treasury yields to step back from a two-year high, which in turn allowed USD/CAD to pare recent gains. However, risk catalysts will be important to watch moving forward.
Technical analysis
Despite the recent pullback moves, USD/CAD keeps the ‘Inverse Head & Shoulders” bullish chart pattern on the four-hour play, suggesting brighter hopes of the buyers until the quote stays above the 200-SMA level of 1.2670.
Read: USD/CAD Price Analysis: Inverse Head & Shoulders keep buyers hopeful around 1.2750