USD/CAD drops back to 1.2800 as oil gains ahead of OPEC+, risks dwindle

• USD/CAD remains pressured around intraday low, snaps two-day run-up.
• WTI oil rises the most in a week as OPEC+ verdict looms.
• Fedspeak, US data and virus updates are the key ahead of Friday’s jobs report.

USD/CAD sellers attack intraday low surrounding 1.2797, down 0.18% daily as European traders brace for Thursday’s bell. Even so, the Loonie pair remains up for the seventh consecutive week.

The quote’s latest weakness could be linked to the increase in prices of Canada’s main export, namely WTI crude oil. The black gold adds around 2.0% while snapping a two-day downtrend as energy traders await OPEC and its allies (OPEC+) meeting’s verdict on the output.

Additionally weighing on the USD/CAD prices could be the indecision among the Fed policymakers and comparatively less hawkish tone than the Bank of Canada (BOC) officials. Recently, Fed Chair Powell reiterated his reflation fears but also said, per Reuters, that he still believes inflation will come down “meaningfully” in the second half of 2022, during testimony against a Senate Commission.

On the contrary, Federal Reserve Bank of New York President John C. Williams said, per New York Times, that Omicron could prolong supply and demand mismatches, causing some inflation pressures to last. Further, Cleveland Fed President Loretta Mester hints at speeding up the taper and likely rates in the next year, per Bloomberg.

It’s worth observing that the BOC Governor Tiff Macklem pushed for interest rate hikes during the latest appearance a week ago, as signaled by Bloomberg.

Other than the Fed versus BOC saga, the first Omicron case in the US and China’s cautious optimism act as extra catalysts that help the USD/CAD sellers.

Amid these plays, US Treasury yields seesaw around a 10-week low whereas stock futures print mild gains by the press time.

Moving on, weekly Initial Jobless Claims from the US will join a slew of Fed policymakers’ speeches and covid updates to entertain USD/CAD traders but major attention will be given to the OPEC+ news and Friday’s employment data from the US and Canada.

Technical analysis

A clear upside break of the previous resistance line from August, around 1.2775 at the latest, directs USD/CAD buyers towards September’s high near 1.2900.