USD/CAD stays firmer around 1.3400 as oil price declines, focus on US/Canada employment data
- USD/CAD picks up bids to extend Friday’s recovery.
- Comments from Iraqi Official, concerns over Russian oil price cap weigh on the WTI.
- Covid woes challenge market sentiment and favor bulls even as hopes of Fed’s easy rate tease sellers.
- Risk catalysts, monthly job numbers from US, Canada will be crucial for the pair traders.
USD/CAD bulls attack the 1.3400 threshold while extending Friday’s corrective bounce during Monday’s Asian session. In doing so, the Loonie pair cheers the market’s risk-off mood, as well as softer prices of WTI crude oil, Canada’s main export item.
WTI crude oil remains pressured around $76.30, down for the third consecutive day, as bears cheer the market’s risk-off mood, as well as price-negative headlines from Iraqi official and relating to the Russian oil price cap.
“The OPEC+ meeting in December will take into account the condition and balance of the market,” Iraq's state news agency quoted Saadoun Mohsen, a senior official at the country's state oil marketer (SOMO), as saying on Saturday. Elsewhere, the talks among the members of the Group of Seven Nations (G7) and the European Union (EU) continue to drag on the Russian oil price cap. As per the latest updates, the $65 per barrel is the sticking point as discussions are likely to resume on Monday.
That said, the prospect of the Fed’s slower pace of interest rate hikes weighed on the US Dollar the previous week.
It’s worth noting that the People’s Bank of China’s (PBOC) cutting of the Reserve Requirement Ratio (RRR) by 25 basis points (bps) effective from December 5 joins the Covid woes to also propel the USD/CAD prices.
China reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday. The dragon nation has been using the stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far. On the contrary, a deadly fire in a building was allegedly linked to the virus-linked lockdown measures and resulted in mass protests in Beijing and Shanghai.
Amid these plays, the US Dollar Index (DXY) stays defensive around 106.30 while the US stock futures and US Treasury yields pare recent losses.
Moving on, the second-tier US data relating to employment may entertain the USD/CAD traders but major attention should be given to the aforementioned risk catalysts and the November month’s job report for the US and Canada.
Technical analysis
A two-week-old symmetrical triangle restricts short-term USD/CAD moves between 1.3430 and 1.3340.