USD/CAD eyes exhaustion at 1.2830 as oil rebounds, BOC’s Macklem in focus

• USD/CAD is displaying a sense of exhaustion after reaching elevated levels at 1.2830.
• Oil prices have rebounded sharply on the announcement of prudent monetary policy in China.
• The speech from BOC’s Macklem will remain in focus.

The USD/CAD pair is witnessing some signs of exhaustion after a juggernaut upside move from the previous week’s low at 1.2458. The asset has been scaling higher as negative market sentiment has been underpinning the safe-haven assets. While exhaustion signals at monthly highs of 1.2830 could be tagged to a firmer rebound in the oil prices.

China’s promise to support its economy through prudent monetary policy has infused fresh blood in oil prices. More liquidity in the economy to support the demand will fetch oil requirements to normalcy. The oil prices have reclaimed the $100.00 mark. The black gold wasn’t performing well as the epidemic of the Covid-19 to Beijing from Shanghai renewed the fears of a slippage in the aggregate demand in China. Also, the mass testing in Beijing was advocated for severe lockdown measures.

It is worth noting that China is the biggest importer of oil and any concerns in demand for oil from the dragon economy could result in server impact on oil prices. Also, Canada is the largest exporter of oil to the US and higher oil prices result in higher fund inflows for the loonie area.

Going forward, investors will focus on the speech from Bank of Canada (BOC)’s Governor Tiff Macklem, which is due on Tuesday. Also, the quarterly US Gross Domestic Product (GDP) number will fall on the same day, which is expected to land at 7.2%.