USD/CAD flirts with 11-week high near 1.2900 as oil remains firmer, Ukraine fears ebb

• USD/CAD pauses the four-day uptrend near the highest levels since late December 2021.
• WTI crude oil remains firmer around 14-year high.
• Ukraine steps back from NATO goals, Russia’s Putin retaliates to Western sanctions.
• China inflation, risk catalysts will be crucial for near-term directions.

Having refreshed 11-week low the previous day, USD/CAD seesaws around 1.2880 during Wednesday’s Asian session. In doing so, the loonie pair struggles to justify upbeat prices of Canada’s main export item WTI crude oil and cautious optimism in the market.

WTI crude oil prices print a four-day uptrend around $123.00, up 0.30% intraday by the press time. That said, the black gold rose to the fresh high since 2008 the previous day as the market raised doubts on Ukraine’s effort to de-escalate geopolitical tensions with Russia.

The receding geopolitical fears from Ukraine tested the oil buyers of late, as well as the risk appetite. On the same line were the sanctions to import Russian oil and gas from the US and the UK. However, Moscow’s readiness to retaliate and hidden dissatisfactory from Kyiv's latest moves keep oil buyers hopeful around the highest levels last seen during 2008.

Talking about data, the US trade deficit rallied to a record high and the small business confidence, as signaled by IBD/TIPP Economic Optimism gauge for March, dropped to the lowest in 13 months.

Against this backdrop, the US 10-year Treasury yields fail to extend the previous day’s positive performance around 1.84%, down 1.3 basis points (bps) whereas the S&P 500 Futures remain mostly steady near 4,170 at the latest.

Looking forward, China’s Consumer Price Index (CPI) and Producer Price Index (PPI) for February, expected 0.8% and 8.7% versus 0.9% and 9.1% respectively, will decorate the calendar but major attention will be given to qualitative catalysts for clear directions.

Technical analysis

USD/CAD needs to stay beyond February’s top surrounding 1.2880 to direct bulls towards the multiple resistances marked from late 2020 surrounding 1.2960.