USD/CAD has reversed back from Monday highs at 1.2800 to the 1.2750 area. Reports that Biden will axe the Keystone XL as early as his first day in office. US politics, a host of Canadian data and the Bank of Canada rate decision will be in focus this week. USD/CAD hit highs at pretty much bang on the 1.2800 level during the early part of Monday’s European session, but the pair has since reversed to trade around the 1.2750 mark. The failure to break above the big figure also coincided with a failure to break above a long-term downtrend linking the 13, 21 and 22 December and 11 January highs. Thus, the pair maintains its bearish long-term bias for now. Trade was quiet on Monday and volumes low, with US participants away for MLK Day, hence the difficulties USD/CAD (and other major FX pairs) had in breaking key levels. The pair finished Monday trade with modest gains of about 0.1% or 14.8 pips and was broadly unfazed by marginally stronger than expected Housing Starts data for December (came in at 228.3K versus expectations for 227K). Biden set to cancel Keystone XL pipeline permit US President-elect Joe Biden is planning to cancel the permit for the $9B Keystone XL pipeline project as one of his first acts in office and maybe even as soon as his first day, according to sources cited by Reuters. In response, Alberta Premier Jason Kenney said on Twitter that cancellation would eliminate jobs, weaken US/Canada relations and undermine American energy security by making the country more dependent on imported oil from the OPEC+ cartel. Kenney also reportedly sees a strong case for seeking damages under the two countries NAFTA agreement should the US cancel the project. According to Adam Button, chief currency analyst at ForexLive, “the Canadian dollar is indicating some disappointment on the Keystone XL front… Few market watchers were expecting the pipeline to be approved but that it will be axed so quickly indicates that Trudeau doesn’t have much sway with Biden”. Driving the week USD/CAD will continue to track risk appetite and crude oil prices. More specifically, markets are on notice for incoming US Treasury Secretary Janet Yellen’s testimony to the Senate Finance Committee on Tuesday for commentary on the Biden administrations USD policy (pre-released text suggests she will say the government will be taking a hands-off approach to FX rates) and anything on fiscal stimulus. US President-elect Joe Biden’s inauguration on Thursday will also be eyed for any fiscal stimulus talk; markets are increasingly doubting the ability of the incoming President to implement his spending plans in full. In terms of the loonie more specifically, it’s a busy week of domestic fundamentals; November Manufacturing and Wholesales Sales will be released on Tuesday, December Consumer Price Inflation numbers of Wednesday, December New Housing Price Index figures on Thursday and December Retail Sales on Friday. But the main event of the week will be the Bank of Canada monetary policy decision; markets currently price a non-negligible chance that, following dovish commentary back in December (especially regarding recent CAD strength), the bank might be tempted to go with a micro-cut to interest rates to 0.1% from 0.25%. Credit Agricole think that “the BoC will maintain a stable outlook given that policy rates are at their lower bound and after the policy measures the MPC announced late last year to lengthen the average maturity of its QE purchases”. Moreover, the bank thinks that “the BoC will continue to focus on the Canadian economic outlook and respond to any potential deterioration in the medium – to long-term by increasing the size of its asset purchases”. As a result, concludes Credit Agricole, the loonie “will likely take its cue from UST yields and global commodity prices next week”. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next GBP/USD Price Analysis: Monday’s bullish pin bar keeps buyers hopeful FX Street 10 months USD/CAD has reversed back from Monday highs at 1.2800 to the 1.2750 area. Reports that Biden will axe the Keystone XL as early as his first day in office. US politics, a host of Canadian data and the Bank of Canada rate decision will be in focus this week. USD/CAD hit highs at pretty much bang on the 1.2800 level during the early part of Monday’s European session, but the pair has since reversed to trade around the 1.2750 mark. 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