USD/CAD renews weekly top around 1.3800 as hawkish Fed bets battle with oil’s rebound

• USD/CAD retreats from one-week high, renews intraday low of late.
• DXY stays firmer during full markets, yields seesaw around recent tops.
• Hedge funds keep hawkish bias about WTI despite China’s zero covid policy, upbeat Fed bets.
• Risk of downside appears limited considering the US dollar’s safe-haven allure and the fears of global recession.

USD/CAD takes the bids to renew one-week high around 1.3800 during Tuesday’s Asian session. In doing so, the Loonie pair pays little heed to the recently firmer prices of Canada’s main export WTI crude oil as the US Dollar Index (DXY) traces firmer yields.

That said, WTI crude oil prices rise half a percent to poke the $90.30 level at the latest, reversing the previous day’s pullback moves, as hedge fund and money market players keep their hawkish bias for the black gold despite a firmer US dollar. “The number of short positions across all six contracts fell by 26 million barrels, one of the largest reductions this year, while long positions increased by 36 million,” mentioned Reuters. The news also stated that the bullish positions outnumbered bearish shorts by 4.63:1 (58th percentile) up from 3.63:1 (40th percentile) on Sept. 27.

Elsewhere, the US 30-year Treasury yields rise to a fresh high since January 2014 and propel the DXY to print a five-day uptrend around 113.30.

In doing so, the yields take clues from the hawkish Fed bets and geopolitical, as well as economic, fears amid the ongoing Russia-Ukraine and the Sino-American tussles. That said, the CME’s FedWatch Tool signals a 78.4% chance of the Fed’s 75 bps rate hike in November.

Amid these plays, S&P 500 Futures remain pressured around a one-week low.

Looking forward, the USD/CAD traders may pay attention to the Fedspeak amid a light calendar ahead of Wednesday’s Fed Minutes and Thursday’s US Consumer Price Index (CPI) for September.

Given the battle between the market’s rush towards risk safety and the oil price rebound, the USD/CAD pair may grind higher ahead of this week’s key data/events mentioned above.

Technical analysis

An ascending resistance line from Thursday, near 1.3785 by the press time, restricts immediate USD/CAD upside.