USD/CAD: Reverses early-Asia recovery, eyes BOC’s Wilkins, Canadian CPI
- USD/CAD drops back below 1.3100 after initially rising to 1.3117.
- WTI trims losses, US dollar declines further amid virus fears.
- Canada CPI likely to ease YoY, BOC’s Wilkins turned dovish recently.
USD/CAD battles 1.3100 while heading into Wednesday’s European session. In doing so, the loonie pair revisits the day-start levels that preceded a move-up to 1.3117. The reason could be traced to the US dollar weakness and recovery moves in Canada’s main export, WTI crude oil. Also likely to weigh on the pair is the upcoming speech from the Bank of Canada (BoC) senior deputy governor Carolyn Wilkins and October month Consumer Price Index (CPI) data from Ottawa.
The US dollar index (DXY) drops for the fifth day in a row while attacking the lowest since November 09. In doing so, the greenback gauge versus the major currencies prints 0.13% intraday losses, currently around 92.33. Alternatively, WTI keeps pullback from the day’s bottom of $41.32 despite recently easing from $41.67 to $41.54.
Global market sentiment turns sour as the coronavirus (COVID-19) woes spread outside the northern hemisphere. Recently, Tokyo witnessed a major increase in the covid numbers that push the Japanese capital towards the highest alert levels. Other risk catalysts include the US stimulus deadlock as well as the Aussie-China tussle.
While portraying the risk aversion, the US stock futures join the 10-year Treasury yields to print mild losses.
Looking forward, USD/CAD bears may initially aim for any surprises from the BOC’s Wilkins after his latest comments cited covid fears. Following that, Canada’s October month CPI, expected 0.4% YoY versus 0.5% prior, will be the key to watch. It’s worth mentioning that the weekly oil inventory data from the US Energy Information Administration (EIA) can also direct the pair moves by having a direct impact on the oil prices.
Technical analysis
Unless successfully breaking a falling trend line from November 04, currently around 1.3135, USD/CAD sellers are less likely to relinquish controls even for the short-term.