USD/CAD grinds lower past 1.2600 amid firmer oil, cautious optimism
- USD/CAD remains pressured around monthly low after four-day downtrend.
- Market optimism, API stockpiles help WTI to stay firmer around seven-year top.
- US ADP Employment Change, headlines over stimulus, debt ceiling and China becomes important for fresh direction.
USD/CAD consolidates recent losses around the monthly low, sidelined near 1.2580 during Wednesday’s Asian session.
The loonie pair dropped during the last four consecutive days to print the one-month bottom the previous day despite the US dollar strength as Canada’s key export item, crude oil, refreshed multi-month high.
WTI crude oil prices jumped to the fresh high since November 2014 on Tuesday, seesaw around $78.80 at the latest, amid firmer sentiment and weaker-than-previous weekly inventory data from the industry source. That being said, the American Petroleum Institute (API) Weekly Crude Oil Stock dropped below 4.127M previous reading to 0.951M for the period ended on October 01.
Underpinning the market optimism were the hopes of the US debt limit will be raised soon to avoid the empty-pocket situation. Recently, the global rating giant Moody kept the US credit rating unchanged at AAA and backed concerns, not to forget optimistic comments from US President Joe Bide despite GOP rejection.
However, the Sino-American tension and the Fed tapering concerns challenge the USD/CAD bears ahead of the key US jobs report, as well as today’s ADP Employment Change for September.
Read: US ADP Employment Change September Preview: Yes, its all about the Fed
Amid these plays, the US Treasury yields and the US Dollar Index (DXY) remained strong but the equities ignored the challenges and lured bulls. At the latest, S&P 500 Futures print mild gains.
In addition to the US ADP Employment Change, headlines concerning China and the weekly reading of the official oil stockpile from the US Energy Information Administration (EIA), will be important to watch.
Technical analysis
A 10-week-old rising support line near 1.2550 challenges the USD/CAD pair sellers before the 200-DMA level of 1.2516.