USD/CAD off six-week highs, tracks USD lower ahead of BOC’s Macklem

• USD/CAD bulls take a breather after a remarkable upsurge to six-week highs.
• The US dollar corrects, dragging USD/CAD lower towards 1.2700.
• WTI price tumbles over 4% on China covid lockdown concerns, risk-aversion.

USD/CAD is off the six-week highs of 1.2757, consolidating the upsurge above 1.2700 amid a correction in the US dollar while the WTI price keeps falling.

The pullback in the major could be attributed to the correction in the US dollar across the board despite rife risk-aversion. The global market sell-off is boosting the haven demand for the US bonds while weighing heavily on the US Treasury yields. The weakness in the yields is dragging the greenback lower.

USD/CAD, however, continues to find support from plunging oil prices, with WTI meandering in over two-week lows at $97.03. The extended slump in the black gold comes on the back of heightened worries over demand for oil and its products after the covid outbreaks in China are rapidly spreading to Beijing. The Chinese authorities are planning to strengthen the restrictions in Shanghai while the lockdowns could extend to Beijing.

Looking ahead, the pair will continue to follow the price action in the dollar, as well as, the US oil, in absence of any top-tier economic releases from the US and Canada. Although the speech by Bank of Canada (BOC) Governor Tiff Macklem will also hog the limelight.

USD/CAD: Technical levels to consider