USDCAD sticks to gains near weekly high amid weaker oil prices, modest USD strength

• USDCAD gains traction for the second straight day and is supported by a combination of factors.
• Weaker oil prices undermine the Loonie and act as a tailwind amid a pickup in the USD demand.
• Traders now look forward to the US macroeconomic releases and Fedspeak for a fresh impetus.

The USDCAD pair builds on the overnight goodish rebound from the 100-day SMA support and edges higher for the second successive day on Thursday. The pair maintains its bid tone through the first half of the European session and is currently trading around mid-1.3300s, just a few pips below the weekly high touched earlier today.

Crude oil prices remain depressed near the monthly low, which, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USDCAD pair amid a modest pickup in the US Dollar demand. A new COVID-19 outbreak in China raises concerns over slowing fuel demand in the world's largest crude oil importer. This, to a larger extent, overshadows worries about tight global supplies and continues to weigh on the black liquid.

The USD, on the other hand, attracts some haven flows in the wake of a fresh leg down in the equity markets. Furthermore, Wednesday's upbeat US Retail Sales data might have forced investors to scale back their bets for a less aggressive policy tightening by the Fed. This is evident from an uptick in the US Treasury bond yields, which is seen as another factor benefitting the greenback and offering additional support to the USDCAD pair.

Apart from the aforementioned fundamental factors, the overnight failure near a technically significant 100-day SMA prompts traders to lighten their bearish bets around the USDCAD pair. Bulls, however, might wait for some follow-through strength beyond the 1.3360 area before positioning for any further intraday gains. Next on tap is the US economic docket, featuring the Philly Fed Manufacturing Index and the usual Weekly Initial Jobless Claims.

Traders will further take cues from speeches by a slew of influential FOMC members. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the USDCAD pair. Apart from this, oil price dynamics should also contribute to producing short-term trading opportunities around the major.

Technical levels to watch