USD/CAD struggles to overcome the eight-week low, flashed the previous day, by taking rounds to 1.2600 during Tuesday’s initial Asian session.
The loonie pair dropped for the fifth consecutive day at the latest as prices of Canada’s key export item, WTI crude oil, renewed weekly high. However, hawkish comments from the Fed policymakers and firmer US dollar challenged the sellers afterward.
That said, WTI crude oil prices extend the previous four-day uptrend around $111.00, up 0.25% at the latest.
The black gold’s latest recovery could be linked to the geopolitical risks emanating from Ukraine and Saudi Arabia. Recently, Ukraine President Volodymyr Zelenskyy recently mentioned that no immediate decision is possible on occupied Ukrainian territory per Interfax. Additionally, US President Joe Biden also cited fears of a cyberattack against the US.
Elsewhere, the US dollar took clues from the Treasury yields that rallied on upbeat Fedspeak. Atlanta Fed President Bostic and Richmond Fed’s Barkin initially promoted the US central bank’s ability to restrain inflation, indirectly signaling a faster pace of the rate hike. The comments got additional back up from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary.”
It’s worth noting that the US 10-year Treasury yields rallied to the fresh high since May 2019 after rising almost 15 basis points (bps) to 2.32% at the latest. The firmer yields weighed on the Wall Street benchmarks after the best week since November 2020.
Looking forward, comments from Fed Chair Jerome Powell will be eyed closely for fresh impetus while Canada’s Industrial Production Price and Raw Material Price Index for February will also direct short-term moves. However, major attention will be given to the Russia-Ukraine headlines and Fedspeak for a clearer view.
A daily closing below the 200-DMA, around 1.2615 by the press time, directs USD/CAD bears towards an upward sloping support line from late October 2021, close to 1.2560 at the latest.
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