USD/CAD wavers around 1.2500 as WTI recovery, vaccine hopes tease sellers

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  • USD/CAD failed to extend the previous day’s corrective pullback despite recent bounce off intraday low.
  • Oil follows geopolitical news, upbeat US data and stimulus hopes to stay mildly bid.
  • Preliminary US Markit PMIs for April will be important but risk catalysts will be the key.

USD/CAD attempts recovery from intraday low but fails to go farther from the 1.2500, down 0.05% on a day, amid Friday’s Asian session. In doing so, the Loonie pair defies Thursday’s consolidation of the heaviest losses since June 2020, flashed on Wednesday.

While looking for catalysts, WTI’s recovery and the vaccine hopes from Canada seem to play their roles. WTI rises for the second consecutive day, up 0.40% by the press time, as Iran-Iraq tussles join the hopes of more stimulus and faster vaccinations in the West.

Ottawa’s jabbing reaches the top-tier lines despite lagging behind the standards of the US, Israel and the UK, as per the COVID-19 vaccine progress data from the Organization for Economic Co-operation and Development (OECD). Faster vaccination is the base for the Bank of Canada’s (BOC) latest positive surprise and hence backs the Canadian dollar (CAD) bulls.

Alternatively, the US dollar (DXY) struggles to extend the previous day’s positive performance even as risk-off woes remain present. Global markets turn risk-averse on Thursday as US President Joe Biden proposed a jump in the capital gains tax to fund his upcoming “American Families Plan”. Also challenging the mood could be the covid fears from Asia.

Amid these plays, S&P 500 Futures wobbles around 4,130 after Wall Street benchmarks dropped.

Looking forward, the US Markit PMIs will be the key as outcomes need to justify upbeat forecasts for April to keep USD/CAD sellers hopeful. It should, however, be noted that the risk catalysts keep the driver’s seat and should be observed closely for fresh impulse.

Technical analysis

Unless providing a sustained break above 1.2510–2500 horizontal resistance, comprising multiple levels marked since late February, not even short-term USD/CAD buyers may take risk of entries.

 

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