- USD/CAD fades bounce off three-week low despite the latest U-turn from intraday bottom.
- Markets players pare the previous day’s losses but WTI crude oil remains amid geopolitical fears, OPEC+ expectations.
- US President Biden confirms ban on Russian flights in US airspace.
- BOC is up for the first rate hike since 2017, Powell’s testimony, US ADP Employment Change eyed as well.
Despite bouncing off the intraday low, USD/CAD prints mild losses around 1.2720 during early Wednesday morning in Europe.
The pair bears recently cheer a pause in the market’s risk-aversion wave, as well as upbeat prices of Canada’s main export item WTI crude oil, as traders await the Bank of Canada’s (BOC) Interest Rate Decision.
Having witnessed a two-day risk-aversion, mainly due to the Ukraine-Russia tussles, global market sentiment improved during early Wednesday. The improvement in the risk appetite could have taken clues from the US President Joe Biden’s State of the Union (SOTU) speech as it portrayed the US readiness to be “self-reliant” and battle inflation while also banning Russian flights from the US airspace.
While portraying the mood, the US 10-year Treasury yields hold onto the early Asian session’s bullion consolidation around 1.75%, up four basis points (bps) at the latest. However, the S&P 500 Futures fades the initial mild gains, up 0.10% intraday around 4,310 at the latest.
It’s worth noting that WTI crude oil prices crossed June 2014 peak, marked the previous day, while rallying to $109.30 before a few minutes. The black gold’s run-up mainly relied on the supply fears due to the Russian invasion of Ukraine. Also favoring the oil buyers were the comments from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a grouping known as OPEC+. As per Reuters, the oil cartel is likely to stick to its existing policy of increasing output by 400K barrels per day (BPD) each month in April during today’s meeting. The news quotes the reason as, “Russia's invasion of Ukraine having not affected OPEC+ deal functioning so far.”
Looking forward, the Bank of Canada’s (BOC) interest rate moves and forward guidance will be more important as the markets have already priced in a 0.25% rate hike, which is widely expected. Hence, a disappointment may propel the USD/CAD prices.
Read: Bank of Canada Rate Decision Preview: Hawkish hike to exacerbate the pain in USD/CAD
Additionally, headlines from Russia-Ukraine and Chair Jerome Powell’s bi-annual testimony, as well as the US ADP Employment Change for February, will also be important to watch for clear direction.
Read: Powell Preview: Rethink because of the war? Not so fast, Fed set to remain on track, dollar to rise
Technical analysis
Sustained trading beyond the 200-SMA join firmer RSI and receding the bearish bias of MACD to hint at the pair’s further upside. However, the 50-SMA and one-week-long descending trend line guard the quote’s immediate upside around 1.2745-50.