USD/CAD keeps bounce off weekly low near 1.2950 amid softer oil prices, US PMI eyed

• USD/CAD picks up bids to defend the previous day’s rebound from one-week low.
• WTI crude oil remains pressured around monthly low amid chatters over gas tax holiday.
• Bulls stay hopeful amid market’s anxiety, Fed Chair Powell’s defense to the biggest rate hike since 1994.

USD/CAD refreshes intraday high around 1.2960 during the initial Asian session on Thursday, extending the rebound from the weekly low. In doing so, the Loonie pair takes clues from softer oil prices, as well as the US dollar’s reluctance to decline further, amid a quiet session.

WTI crude oil prices dropped 0.85% to $103.50, down for the second consecutive day around the lowest levels in six weeks. The black gold’s latest weakness could be linked to the bearish weekly inventory data from the American Petroleum Institute (API). As per the API Weekly Crude Oil Stock for the period ended on Jun 17, stockpiles rose 5.607 million barrels versus an increase of 0.736 million barrels the previous week. Additionally, talks that US President Joe Biden will announce gas tax relief by the end of the week also weighed on the oil prices.

It should be noted that the market’s indecision following the Fed Chair Jerome Powell’s Testimony and the fears of recession, as well as aggressive monetary policy actions, also propel the USD/CAD prices.

Federal Reserve (Fed) Chairman Jerome Powell’s justification for the recent rate hike, the biggest since 1994, managed to gain acceptance, at least during the first round of the Testimony on the bi-annual Monetary Policy Report. However, Powell’s rejection of the need for a heavy rate increase seemed to exert downside pressure on the greenback afterward.

While portraying the mood, Wall Street managed to pare the day-start losses but ended Wednesday with mild losses whereas the US 10-year Treasury yields marked the biggest daily fall in a week by ending the day at around 3.16%. That said, the S&P 500 Futures print mild losses by the press time.

Talking about data, Canada’s headline Consumer Price Index (CPI) rose to 7.7% YoY versus 7.4% expected and 6.8% prior. The more observed inflation figure, namely the Bank of Canada CPI Core, rose 6.1% YoY compared to 5.9% market consensus and 5.7% previous readings.

Moving on, the US S&P Global PMIs for June will entertain the USD/CAD traders along with the weekly US Jobless Claims and the second round of Fed Chair Jerome Powell’s Testimony.

Technical analysis

10-DMA puts a floor under short-term USD/CAD declines around 1.2930. However, the double tops around 1.3075-80 appear a tough nut to crack for the bulls.