USD/CAD fails to portray WTI gains, stays mildly bid near 1.3070

• USD/CAD holds onto recovery gains from Thursday.
• The week-start rise by WTI seems to fade, the US dollar remains broadly stronger.
• BOC will be the key event this week.

USD/CAD trades near the intra-day high close to 1.3070 during the Asian session on Monday. The pair recovers since Thursday amid increasing calls of no policy change from the Bank of Canada (BOC) as well as following upbeat data from the US.

The pair fails to respect to oil’s week-start gap-up, taking clues from Libya and Iraq, as questions surrounding the BOC’s next move remain unanswered amid a lack of fresh catalysts and broad US dollar strength.

In addition to the most positive data from the US, which indicates a re-think on the US Federal Reserve’s (Fed) “wait and watch” mood, the Trump administration’s ability to strike the key trade deals with global superpowers also support the US dollar (USD) strength.

That said, market’s risk tone also remains subdued with the S&P 500 Futures taking rounds to 3,327.

Analysts at ING cite Canadian GDP, Retail Sales and housing numbers to question strong pay gains. The same helps them to hold outlook for stable policy at the 22 January Bank of Canada policy meeting, but it leaves the possibility of action open for subsequent meetings.”

On the contrary, Reuters says that 27 of 39 economists surveyed by Reuters expect the BOC to keep its overnight rate unchanged at 1.75% through 2020 and the first half of 2021.

While Monday’s off in the US and a lack of major data/events elsewhere can keep the momentum restricted, any severe trade/political headlines will be enough to entertain traders ahead of Wednesday’s BOC and Canadian CPI data.

Technical Analysis

A sustained break of 21-day SMA, at 1.3054 now, propels the quote towards the monthly resistance line, at 1.3100, whereas 1.3030 and 1.3000 can question sellers past-1.3054.