USD/CAD looks set to regain 1.2900 as oil retreats amid sluggish markets

• USD/CAD picks up bids to consolidate the biggest daily fall in two weeks.
• Treasury yields fail to extend post-Fed downside despite being pressured of late.
• Oil prices remain pressured amid growth fears, hopes that US can help recede the supply crunch.
• US housing numbers, activity data to entertain intraday traders.

USD/CAD regains upside momentum, following the post-Fed pullback from a monthly high, as oil buyers and yields both fade the latest corrective moves. That said, the Loonie pair recovers from its intraday low to 1.2890 during early Thursday morning in Europe.

The US 10-year Treasury yields rebound from an intraday low of 3.288% to 3.32% by the press time. Even so, the benchmark bond coupons remain negative for the second consecutive day, down 7.3 basis points (bps) at the latest.

Elsewhere, WTI crude oil prices retreat towards an intraday low of $113.40, around 113.65 at the latest.

While the bond coupons’ sluggish moves could be linked to the fears of more interest rate hikes from global central bankers, oil had an additional reason, emanating from the US, to pare the latest gains.

US President Joe Biden, in a letter, demanded oil companies explain why they aren't putting more gasoline on the market, sharply escalating his rhetoric against the industry. The same joins fears of energy demand amid rising interest rates and concerns surrounding economic slowdown.

Amid these plays, US stock futures remain firmer while tracking the Wall Street benchmarks whereas the Asia-Pacific equities also grind higher during a sluggish session.

Looking forward, the second-tier housing and activity data from the US, as well as Canada’s Manufacturing Sales, may entertain equity traders ahead of Friday’s speech from Fed Chair Jerome Powell.

Technical analysis

USD/CAD bears need validation from the 1.2880-70 resistance area comprising multiple levels marked since late February. Until then, the Loonie pair remains directed towards an upward sloping resistance line from August 2021, at 1.2985 by the press time.