USD/CAD pokes 1.2850 as greenback pares post-Fed Minutes losses ahead of US GDP

• USD/CAD takes the bids to renew intraday high, extends recovery from monthly low.
• US dollar consolidates post-FOMC Minutes losses amid fears of growth, inflation.
• Oil prices also struggle amid mixed sentiment, sluggish sessions and firmer USD.
• US GDP, Canada Retail Sales for March will be important for intraday moves.

USD/CAD renews intraday top around 1.2850, paring weekly losses, as the US dollar renews upside momentum heading into Thursday’s European session.

The greenback gauge, namely the US Dollar Index (DXY), picks up bids to refresh daily top around 102.25. In doing so, the DXY reverses the previous day’s losses after the Fed Minutes raised doubts on the 50 bps rate hike trajectory post-September.

The underlying reasons could be linked to the escalating market fears of global recession, as well as growing pessimism surrounding China and Russia. The comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’,” become a fresh threat to the US-China trade relations. Previously, Beijing criticized the US Draft Security Council resolution on North Korea and added strength to the Sino-American tensions. Also negative from China are the covid-led lockdowns that weigh on the world’s second-largest economy.

Also, fears of global recession due to the Ukraine-Russia crisis, recently backed by World Bank President David Malpass fuel the USD/CAD prices. "Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession," said World Bank's Malpass on Wednesday during an event hosted by the U.S. Chamber of Commerce.

Furthermore, the recently softer prices of WTI crude oil, Canada’s main export, add to the USD/CAD run-up. That said, the black gold drops 0.15% intraday to $109.80 by the press time.

Amid these plays, the S&P 500 Futures drops 0.35% intraday whereas the US 10-year Treasury also fail to bounce off the monthly low, after Wednesday’s failed attempt, while dropping back to 2.74% at the latest.

Moving on, the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, will join the US Personal Consumption Expenditure (PCE) details for April and weekly jobless claims to direct short-term Loonie moves. Also important will be Canada’s Retail Sales for March, expected at 1.4% versus 0.1% prior.

Technical analysis

A clear break of the 21-DMA, around 1.2870 by the press time, becomes necessary for the USD/CAD buyers to prosper. On the contrary, a monthly support line near 1.2770 restricts short-term declines. It’s worth noting that MACD and RSI hint at a further sideways grind.