USD/CAD struggles to justify oil’s rally amid Ukraine, Libya risks
- USD/CAD remains steady after two-day rebound from five-week low.
- WTI crude oil renews 14-year high as Ukraine-Russia woes intensify, Venezuela-US discuss output deal and Libya witnesses 2 fields’ shutdown.
- DXY cheers safe-haven demand, hawkish Fed, as well as strong US jobs report.
- Canadian employment figures, oil headlines will be crucial for short-term directions.
USD/CAD sellers attack the 1.2700 threshold while refreshing intraday low during early Monday morning in Europe. In doing so, the Loonie pair struggles to portray the market’s risk-off mood as strong prices of Canada’s key export item WTI crude oil battle firmer US Dollar Index (DXY).
That said, WTI crude oil rallied to the highest levels since late 2004 while piercing the $125.00 mark earlier in Asia, up 7.0% near $121.40 by the press time. The black gold recently cheered escalating fears of a supply crunch as the OPEC+ refrains from taking additional steps to overcome Russia-linked woes. On the same line could be the headlines suggesting a production halt in Libya’s two oil fields due to armed attack, which in turn caused around 330,000 barrels of output loss, per VOA News.
Elsewhere, the US Dollar Index (DXY) crossed the 99.00 level to refresh the 22-month high before easing to 98.93, up 0.45% on a day by the press time.
The greenback gauge’s upside moves also take clues from the recently firmer US jobs report for February and hawkish comments from Chicago Fed President and FOMC member Charles Evans, in addition to the Ukraine-Russia jitters.
It’s worth noting that the US, Denmark, Canada and the UK are discussing a ban on the Russian oil imports and may rather prefer the Middle East route for energy supply, which in turn highlights recent talks with Venezuela and Iran that tests oil buyers.
Elsewhere, upbeat China trade data for February also help oil prices and keep USD/CAD bears hopeful.
Amid these plays, S&P 500 Futures drop 1.30% whereas the US 10-year Treasury yields fall 2.5 basis points (bps) to 1.69% to portray the heavy risk-off mood.
Looking forward, monthly employment figures from Canada and the US Consumer Price Index (CPI) for February may entertain USD/CAD traders but major attention will be given to the risk catalysts for clear directions.
Technical analysis
USD/CAD fades the bounce off 100-day EMA, around 1.2665 by the press time, below a two-month-old resistance line near 1.2775. Given the bearish MACD and mostly steady RSI, sellers are likely to return.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
