USD/CAD pares daily gains near 1.2700 on firmer oil, Fed signals, focus on Ukraine, US NFP
- USD/CAD fades bounce off five-week low, retreats from intraday low of late.
- Oil buyers cheer Russia-Ukraine crisis, OPEC+ inaction to stay firmer around multi-year top.
- Fed’s Powell propels 0.50% rate-hike concerns, adding importance to today's US jobs report for February.
USD/CAD struggles to keep the previous day’s rebound from late-January lows, mildly bid around 1.2700 during Friday’s mid-Asian session.
That being said, the loonie pair dropped around 40 pips initially on the news of the Russian military’s shelling on the Ukrainian nuclear power plant, one of the largest in Europe. The news renewed Chernobyl woes and propelled the market’s rush towards risk-safety, as well as fuel prices of Canada’s key export item WTI crude oil.
However, the latest headlines taming fears of nuclear radiation seemed to have placated the market’s risk-off mood.
Even so, the latest instance confirms the market’s doubt over the Russia-Ukraine peace talks that agreed on the safe passage of Kyiv’s civilians the previous day.
Amid these plays, S&P 500 Futures drop around 1.0% on a day whereas the US 10-year Treasury yields mark near six pips of a downside to 1.78% by the press time. Further, the US Dollar Index (DXY) eases after refreshing the 2022 peak while WTI crude oil also consolidates daily gains near $110.00 after initially rising to $112.81.
While firmer WTI seems to favor USD/CAD bears, recently increasing odds of faster Fed rate hikes keep the pair buyers hopeful.
Fed Chair Jerome Powell reiterated his support for a 0.25% rate hike, actually showed readiness for a 0.50% rate-lift in the March meeting amid rising inflation fears on Thursday. That said, US ISM Services PMI eased for the third consecutive month in its latest release but the second-tier job data and Factory Orders came in positive.
On the other hand, Bank of Canada (BOC) Governor Tiff Macklem showed readiness to discuss Quantitative Tightening (QT) in his latest speech while also supporting gradual rate increases.
Read: BOC’s Macklem: I am confident we will get back to our 2% inflation target
Looking forward, oil prices and headlines from Ukraine may entertain USD/CAD traders ahead of the key US Nonfarm Payrolls (NFP) for February, expected 400K versus 467K prior.
Read: US Nonfarm Payrolls February Preview: Fed policy runs through Kyiv
Technical analysis
21-DMA probes the USD/CAD pair’s latest rebound near 1.2720 but the bears aren’t likely to retake controls until witnessing a daily closing below the 200-DMA level of 1.2575.