USD/CAD maintains its bearish bias capped below 1.3400
- The US Dollar remains on the defensive with bulls capped at 1.3375.
- Strong Canadian CPI and the rebound in Oil prices are supporting the CAD.
- The US PCE Prics Index data will determine the USD’s direction on Friday.
The Greenback remains on its back foot against the loonie on Thursday. The mild upside attempt seen on Wednesday has been halted at 1.3370, which leaves the multi-month low 1.3305 at a short distance.
CAD surges on higher oil prices and a hawkish BoC
The Canadian Dollar keeps the upper hand with the Greenback looking vulnerable amid increasing speculation that the Federal Reserve is starting to reverse its restrictive policy in March.
In Canada, data released earlier this week revealed that Consumer inflation remains sticky above the 3% yearly rate. This backs the hawkish message conveyed by the Bank of Canada after December´s policy meeting and is underpinning support for the CAD.
Apart from that, Oil prices remain at two-week highs fuelled by Houthi attacks in the Red Sea that have forced shipping firms to reroute their vessels. This provides additional support to the loonie as Canada is one of the world´s major oil exporters.
Later today, the US Jobless claims and the final reading of the Q3 GDP might give some impulse to the USD, although the highlight of the week is Friday´s US PCE Prices Index data. This is the Fed´s favourite inflation gauge and it will provide further insight into the bank´s next steps.
Technical levels to watch