USDCAD SIGNAL 28-03-22 : USDCAD bounces off late January’s low, snaps nine-day downtrend.
- Oil prices decline as Shanghai lockdown, hopes of Iran deal battle geopolitical fears in Saudi Arabia.
- Strong yields underpin USD strength, risk catalysts add to the bullish bias.
- US trade numbers, risk catalysts to entertain traders but US NFP will be crucial amid hawkish Fedspeak.
USDCAD licks its wounds near a two-month low, up 0.12% intraday around 1.2500 during early Monday morning in Europe.
USDCAD SIGNAL : In doing so, the loonie pair prints the first daily gains in 10 as prices of Canada’s key export item, WTI crude oil, drop. Also fueling the USD/CAD prices is the risk-off mood, as well as firmer yields, which favor the USD strength.
That said, the WTI crude oil prices print 1.90% intraday loss while declining to $109.70 by the press time. The black gold’s latest weakness could be linked to the covid-led lockdowns in China, recently in Shanghai, as well as hopes that Iran will soon be able to help global energy markets overcome the supply crunch. It’s worth noting, however, that Houthi attacks on Saudi Arabia’s oil facilities and the Ukraine-Russia crisis keep the oil buyers hopeful.
Elsewhere, the US 10-year Treasury yields rise 5.4 basis points (bps) to the highest levels since May 2019, around 2.54% by the press time, which in turn propelled the US Dollar Index (DXY) towards a two-week high. Also supporting the USD/CAD bulls are the escalation tensions between Russia and the West, as well as indecision over Kyiv-Moscow talks, not to forget the covid woes.
USDCAD SIGNAL : Against this backdrop, the S&P 500 Futures retreat from a seven-week high, down 0.33% intraday around 4,521 by the press time.
Moving on, the US Goods Trade Balance and Wholesale Inventories for February can direct intraday moves. However, major attention will be given to the risk catalysts, comprising headlines concerning the Ukraine-Russia crisis, coronavirus news and yields.
Technical analysis
Any recovery remains elusive unless the quote stays below the 200-DMA level surrounding 1.2615. That said, fresh downside will aim for the yearly bottom of 1.2450.
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