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USD/CAD accumulates bids towards 1.2900 despite firmer oil, US inflation in focus

  • USD/CAD renews intraday high to consolidate the largest daily loss in three weeks.
  • Geopolitical fears, US dollar retreat enabled oils rebound from multi-day low.
  • Sluggish session, light calendar allows traders to pare recent moves.
  • US CPI for July may be the key, second-tier data, risk catalysts may entertain intraday traders.

USD/CAD licks its wounds since it renews daily tops near 1.2870 while paring the largest loss since July 19 during Tuesdays Asian session.

The loonie pair dropped probably the most in three weeks the prior as a recovery in prices of Canadas main export, WTI crude oil, joined a pullback in america dollar. Also exerting downside strain on the USD/CAD prices was the cautious optimism in the markets prior to the US Consumer Price Index (CPI) for July, up for publishing on Wednesday.

Having said that, the WTI crude oil rose by near 2.0% to $89.70 the prior day, around $90.20 by the press time. The black gold prices may have cheered firmer China trade numbers and cautious optimism in the markets to recuperate while ignoring hopes of more output from Iran.

However, US Dollar Index (DXY) traced Treasury yields to consolidate Fridays heavy gains that offered the greenback measure the first weekly positive in three. Having said that, the DXY registered a 0.19% daily loss to 106.37 by the finish of Monday whereas the united states 10-year Treasury yields dropped nearly seven basis points (bps) to 2.75% at the most recent, carrying out a 14-bps run-up the prior day.

Its worth noting that the markets previous risk-on mood seems to have faded lately as US President Joe Biden raised concerns over Chinas actions close to the Taiwan border. On a single line were fears of the Feds aggression and economic slowdown. Considering Fridays strong US jobs report, versus mixed employment data from Canada, the Fed funds futures price in a 69% potential for another 75 bps rate hike in September, per Reuters.

While portraying the mood, S&P 500 Future trim early Asian session gains around 4,145 by the press time.

Shifting, the united states Nonfarm Productivity and Unit Labor Charges for the next quarter (Q2) could entertain USD/JPY traders. Forecasts claim that the united states Nonfarm Productivity could improve to -4.6% from -7.3% prior while Unit Labor Costs may ease to 9.5% versus 12.6% previous readings.

Also read:US CPI Preview: It’s the hard core that matters, five scenarios for critical inflation data

Technical analysis

An impending bull cross on the MACD joins steady RSI (14) to aid the USD/CAD buyers unless the quote breaks an upward sloping trend line from early June, near 1.2835. Having said that, recovery remains limited because the five-week-old horizontal area near 1.2930-35 challenges the upside momentum.

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