USD/CAD stabilizes at one-month high around 1.3350 amid softer Oil price, sluggish US Dollar

• USD/CAD prods July’s peak after two-day uptrend, sidelined of late.
• Oil Price extends fall from multi-day high amid fears of no change in OPEC+ output cut policy, risk-off mood.
• Market’s consolidation after a volatile day, preparations for US data prod Loonie pair at multi-day top.
• Bulls flex muscles amid hawkish Fed hopes, upbeat yields and firmer early signals for top-tier data.

USD/CAD buyers keep the reins around 1.3350, despite the latest inaction, as market players await the key US data heading into Thursday’s European session. In doing so, the Loonie pair seesaws at the highest levels in a month, flashed earlier in the day, while pausing a two-day winning streak.

That said, the quote’s latest inaction could be linked to a pullback in the WTI crude oil price, Canada’s main export item, as well as the lackluster moves of the US Dollar Index (DXY) ahead of the top-tier data.

WTI crude oil rose to the highest level since April 17 before ending the day with the heaviest losses in six weeks as risk aversion joined talks that the Oil producers won’t risk any more cuts to the output. On Wednesday, Reuters cited six OPEC and its allies (OPEC+) sources to report that the Oil cartel is expected to make no changes to its current oil output policy when they meet on Friday, August 4. It should be noted that the black gold prints a two-day downtrend near $79.20, down 0.40% intraday at the latest.

Elsewhere, the DXY cheered the risk-off mood and also benefited from the strong US Treasury bond yields on Wednesday to refresh a three-week high. Also likely to have favored the US Dollar Index bulls were the strong US ADP Employment Change numbers for July. However, failure to cross a nine-week-old resistance line limits the Greenback’s gauge versus the six major currencies to 102.60 at the latest.

Apart from the technical details, the US Treasury Secretary Janet Yellen and White House (WH) Economic Adviser Jared Bernstein’s defense of the US Treasury bonds may have tamed the previous risk-off mood and allow the USD/CAD pair to stabilize.

With this, US 10-year Treasury bond yields rose to the highest level since November 2022 whereas the Wall Street benchmarks closed in the red. That said, the S&P500 Futures remain sidelined at a two-week low after declining in the last two consecutive days.

Looking ahead, multiple US data surrounding employment and activity will be important to watch for the USD/CAD traders. Among them, US ISM Services PMI, Factory Orders, Weekly Initial Jobless Claims and quarterly readings of Nonfarm Productivity and Unit Labor Costs gain major attention.

Technical analysis

A daily closing beyond the 50-DMA and a two-month-old previous resistance line, respectively near 1.3280 and 1.3295, keeps USD/CAD buyers hopeful of witnessing further upside.