USD/CAD pauses thee-day declines above 1.2800 amid softer oil, sluggish markets
- USD/CAD stays defensive around one-week low, mildly bid on a day.
- Oil bulls take a breather at the monthly top.
- Mixed updates over Omicron, US stimulus join holiday mood to restrict market moves.
USD/CAD bounces off 20-DMA to consolidate weekly losses around 1.2815, up 0.10% intraday during early Friday.
The loonie pair tracks a pause in the prices of Canada’s key export item WTI crude oil to print the latest corrective pullback. However, lackluster markets during the holiday season challenge the moves of late.
That said, Thursday’s firmer US Treasury yields and upbeat prints of the Fed’s preferred gauge of inflation, namely the Core PCE Price Index, seemed to have prepared the based for the USD/CAD buyer’s return. It should be noted that Canadian GDP matched 0.8% upbeat forecasts, versus 0.2% upwardly revised prior, for October.
In addition to the firmer US data, indecision over the Omicron conditions and US stimulus also challenge the pair’s further downside.
The US Food and Drug Administration (FDA) also approved Merck's Covid-19 pill on Thursday, a day after approving Pfizer’s pill to battle the Omicron on Wednesday. Earlier in the week, US Military also conveyed news of developing a single cure for covid and all variants. Also on the positive side were the studies showing Omicron has lesser scope hospitalization. On the contrary, the French cancellation of orders for Merck’s pill, citing notably lesser effect than promoted, joins a steady rise in Omicron cases to challenge the market optimism.
Elsewhere, US President Joe Biden and House Speaker Nancy Pelosi remain hopeful of getting the Build Back Better (BBB) plan through the House even as Senator Joe Manchin opposes the bill. As per the latest news from CNN, “Sen. Joe Manchin effectively put an end to negotiations over the current version of the Build Back Better Act, in part over concerns that some provisions might exacerbate inflation. But many economists believe its effect on inflation would be marginal.”
Amid these plays, the US 10-year Treasury yields refreshed yearly high and the Wall Street benchmarks also posted gains. However, the Asia-Pacific stocks are lackluster by the press time.
Given the off in most of the Western markets and a light calendar, the USD/CAD prices are expected to remain sidelined amid a lack of major data/events.
Technical analysis
Although the 20-DMA restricts the immediate downside of the USD/CAD prices near the 1.2800 round figure, a clear break of an upward sloping trend line from December 08, close to 1.2885, tests the quote’s rebound.