USD/CAD struggles to keep 1.2600 as WTI eyes to regain $65.00

USD/CAD seesaws around 1.2620, directionless after recent weakness, during Thursday’s Asian session. The loonie pair failed to portray any major reaction to the Bank of Canada (BOC) meeting the previous day but benefits from the WTI’s gains and US dollar weakness off-late.

Given the US House passage of President Joe Biden’s $1.9 trillion stimulus, up for signing on Friday, market sentiment improved and weighed on the US Treasury yields. Also negative for the bond coupons were the latest 10-year Note Auction in America that gained a lesser yield than the market prices.

Elsewhere, BOC matched the wide forecast of no rate change as the rate statement said, “The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week. The global economy is recovering from the economic effects of COVID-19, albeit with ongoing unevenness across regions and sectors.”

It’s worth mentioning that Russia’s plan for an increase in output couldn’t detail WTI prices as the energy benchmark cheered upcoming stimulus and likely faster economic recovery due to the steady vaccinations.

Wall Street benchmarks and S&P 500 Futures gain from the US stimulus news and Treasury yield weakness whereas commodities and Antipodeans seem to cheer the US dollar weakness.

Looking forward, comments from BOC Deputy Governor Lawrence Schembri will be observed closely to reconfirm the Canadian central bank’s neutral rate bias. Also important will be the speech from US President Biden who may praise the House for backing the much-awaited relief package and can exert additional downside pressure on the US dollar.

Technical analysis

Sustained trading below a downward sloping trend line from October 202, currently around 1.2665, keeps USD/CAD bears hopeful to revisit the sub-1.2600 area.