USD/CAD inter-markets: modest recovery in bond yields limiting Fed-inspired sell-off

Having dropped below 100-day SMA to monthly through, the USD/CAD pair has managed to bounce off lows but struggled to build on to its recovery beyond the 1.3300 handle. 

The not so hawkish Fed monetary policy outlook triggered a sharp slide in the US treasury bond yields and resulted into a broad based US Dollar sell-off. The pair tumbled nearly 200-pips from session peak in reaction to the Fed's signals for just two more rate hikes this year.

However, a goodish recovery in the US Treasury bond yields supported the pair's tepid recovery move. This coupled with a sharp slide in oil markets, with WTI crude oil reversing nearly $1 from session peak and extend the drop further below $49.00/barrel mark, further dented demand for the commodity-linked currency - Loonie, and collaborated to the pair's bounce off two-week lows.

Meanwhile, an equivalent up-tick in the Canadian 10-year bond yield has failed to lend any additional support to the pair's recovery move.

In absence of any fresh fundamental trigger, in-term of any market moving economic releases, the pair remains at the mercy of oil market dynamics. Hence, any up-tick in crude oil prices could attract fresh selling pressure around the major. Meanwhile, a follow through recovery in the US treasury bond yields is likely to lend support and limit any sharp near-term downslide for the major.