USD/CAD pierces under 1.2700 despite flat oil prices

• The USD/CAD strengthens despite flat US crude oil prices, as the greenback remains offered.
• Fed speakers crossing the wires failed to lift the US dollar.
• USD/CAD Technical Outlook: Upward biased, but if bears break below the 100-DMA, would expose the 200-DMA.

In the North American sesión, the USD/CAD falls for the first time in four straight trading days, losses 0.60%. At press time, the USD/CAD is trading at 1.2697. European and US cash equity indices gain, except for the Dow Jones, barely down 0.02%. In the FX complex, the commodity currencies led by the AUD, the NZD, and the CAD, are gaining between 0.60% and 1%, to the detriment of the USD and the JPY.

In the meantime, the Western Texas Intermediate (WTI) US crude oil benchmark is trading at $86.71, barely up 0.02%, a tailwind for the Loonie. The US Dollar Index, a gauge of the greenback’s value versus a basket of six rivals, falls sharply more than 0.50%, sitting at 96.75.

Fed speakers crossing the wires fail to boost the greenback

During the weekend, Atlanta’s Fed President Raphael Bostic expressed that he foresees at least three rate hikes, beginning in March, but further noted that the Federal Reserve would increase 50 basis points if inflations remain “stubbornly high,” according to the FT.

Meanwhile, crossing the wires, Fed’s Daily said that “inflation is too high,” but at the same time noted that labor market recovery is uneven. Regarding monetary policy, she noted that the Fed is “not behind the curve at all.” Furthermore said that she “does not want to ratchet up the rates so quickly that it bridles growth to mouch.”  Daly further added that if the US central bank gets to 1.25% in the Federal Funds Rate (FFR) by the end of the year, “that is quite a bit of tightening, but still supporting the economy.”

The Canadian economic docket features the Producer Price Index (PPI) for December, which came at 0.7% on its monthly reading, higher than the 0.1% in November. Regarding the annually based figure, it rose by 16.1%, lower than the 17.1%.

Meanwhile, Esther George, and Raphael Bostic, Federal Reserve Presidents, would cross the wires around 17:40GMT, and 18:30 GMT, respectively. Any hints regarding balance sheet reduction and rate hikes could be taken from their words.

USD/CAD Price Forecast: Technical outlook

The USD/CAD daily chart is upward biased at press time, as depicted by the daily moving averages (DMAs) residing above the spot price. However, the 50-DMA is under heavy pressure, lying at 1.2711 gave way to CAD bulls, which try to reclaim control, but they will need to break under the 100-DMA at 1.2620 to have a shot at the 200-DMA at 1.2503.

On the flip side, if USD bulls reclaim the 1.2700 figure, that would expose the USD/CAD to upward pressure. The first resistance would be January 28, a daily high at 1.2797, followed by December 3, 2021, a high at .12854, and then 1.2900.