USD/CAD renews 12-day low around 1.2600 amid firmer oil, sluggish USD
- USD/CAD consolidates losses around intraday low, prints six-day downtrend.
- Risk appetite improves amid receding fears over Evergrande.
- Hopes of pre-pandemic energy demand propel WTI oil prices towards yearly peak.
- Fed Chair Powell’s testimony, US data eyed amid a lack of major catalysts at home
USD/CAD remains pressured around a multi-day low near 1.2600, down 0.21% intraday ahead of Tuesday’s European session.
Stronger prices of Canada’s key export item, WTI crude oil, join the US dollar’s failures to cheer firmer Treasury yields to weigh on the USD/CAD around the lowest since September 10. In doing so, the quote attacks a short-term key support line from late June, near 1.2570.
WTI benefits from hopes that the economic transition from the pandemic will recall the pre-covid energy demand. In this regard, the oil giant British Petroleum (BP) says, “Global oil consumption is expected to return to pre-pandemic levels in Q3 2022, with Asia continuing as the center for oil-product demand growth.”
On a different page, the People’s Bank of China’s (PBOC) heavy liquidity injection, recently by 100 billion yuan, battles economic fears related to Beijing and Evergrande. However, a lack of clarity over the US stimulus and debt limit extension challenges the market sentiment, keeping the US dollar afloat despite hesitant moves surrounding the yearly peak.
Amid these plays, US Treasury yields a fresh three-month high while the stock futures also reverse early Asian losses by the press time. However, the US Dollar Index (DXY) remains indecisive, around 93.40 at the latest.
Given the lack of major factors to watch from Canada, Fed Chair Powell’s testimony and chatters over China, as well as Evergrande, will be important to watch. Also important to watch is the monthly print of the US Conference Board’s Consumer Confidence figures for August.
Read: Conference Board Consumer Confidence Preview: Unhappy but still spending
Technical analysis
USD/CAD justifies bearish MACD as well as sustained trading below a one-month-old horizontal hurdle, around 1.2700, as sellers brace for an ascending support line from early June, near 1.2570.