USD/CAD surged lower to hit fresh multi-year lows just above 1.2700 on Thursday, but has since backed off a little. Crude oil prices rallied, supporting the loonie, though bad news on the UK/Canada trade deal could weigh. USD/CAD hit fresh multi-year lows on Thursday of just above the 1.2700 level, with the loonie supported by a steep rise in crude oil prices after the open of the NYMEX trading pit at 14:00GMT. The pair was little affected by mixed US data, which saw CPI metrics come in a little firmer than expected but still well below the Fed’s inflation target and a much higher than expected jump in initial unemployment claims to above 850K from 716K last week. As things stand, the pair trades lower by about 90 pips or 0.7%. WTI gains as crude oil traders front-run Despite yesterday’s much larger than expected build in headline EIA crude oil inventories, potentially as a result of the impact of last week’s Thanksgiving holiday and recent new Covid-19 restrictions (says analysts), crude oil traders are more focused on the longer-term demand picture. Indeed, despite the possibility that the US economy will fall into recession over the coming weeks given the spread of Covid-19, markets have been much more focused on 1) the prospect of the FDA giving Pfizer/BioNTech’s vaccine the greenlight for emergency use, which could happen as soon as today and 2) whether the US Congress can reach a deal on further fiscal aid in the coming days. Traders appear to have front-run positive conclusions on both topics on Thursday, with WTI prices up over 4% at one point and trading with a $47.00 handle (at seven-month highs). This has given a boost to petroFX across the board, including CAD. Looking ahead, Bank of Canada Deputy Governor Beaudry will be speaking at 18:30GMT, and is likely to comment on the bank’s interest rate decision on Wednesday. As a reminder, the bank held its policy metrics steady with rates at 0.25% and monthly QE purchases at C$4B, whilst sounding a little more upbeat on the outlook for the Canadian economy in 2021, although a little concerned about its near-term trajectory given rising Covid-19 cases as the country heads into winter. GBP/CAD slides as UK/Canada trade talks in jeopardy Some weakness has been seen in the GBP/CAD pair in wake of reported UK government fears that its post-Brexit trade deal with Canada might not be able to come into force in time to prevent tariffs being imposed between the two nations. The agreement is yet to be confirmed by the Canadian parliament who are set to break up for recess on Friday. If the Canadian parliament does fail to give the two countries’ trade deal the thumbs up, £20B worth of goods in bilateral trade are at risk of being thrown onto WTO tariffs from 1 January 2021. The news is yet to impact USD/CAD, but could trigger some minor weakness. USD/CAD surges below triple bottom USD/CAD surged below a prior triple bottom at roughly 1.2760 earlier on during Thursday’s session. However, the bulls have come in and supported the pair ahead of the 1.2700 level and the pair now seems indecisive as to whether it wants to move higher again and test the previous weekly lows at 1.2760, or reverse back to the downside to have another run at the psychological 1.2700 level. 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 USD/JPY capped by M-formation New York highs, eyes on 104.05 FX Street 2 years USD/CAD surged lower to hit fresh multi-year lows just above 1.2700 on Thursday, but has since backed off a little. Crude oil prices rallied, supporting the loonie, though bad news on the UK/Canada trade deal could weigh. USD/CAD hit fresh multi-year lows on Thursday of just above the 1.2700 level, with the loonie supported by a steep rise in crude oil prices after the open of the NYMEX trading pit at 14:00GMT. 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