USD/CAD clings to 1.3000 as oil bulls take a breather, DXY steadies, focus on US NFP

• USD/CAD remains sidelined after reversing from a six-week high.
• WTI crude oil pares the biggest daily jump in 1.5 months.
• Hawkish Fed bets, fears of economic slowdown challenge energy prices, pair bears.
• US CB Consumer Confidence, PMIs can entertain traders ahead of Friday’s NFP.

USD/CAD remains sidelined after reversing from a monthly top, treads water around 1.3010 during Tuesday’s initial Asian session. The loonie pair’s latest inaction could be linked to the pause in the prices of Canada’s main export item, WTI crude oil, after the biggest daily jump in six weeks. Also limiting the moves is the traders’ lack of conviction amid a light calendar and cautious mood ahead of the key US jobs report for August, up for publishing on Friday.

WTI crude oil prices remain sidelined at around $96.50, after rising the most in 1.5 months the previous day. In doing so, the black gold seesaws around the monthly high while keeping the previous day’s upside break of the 50-DMA and the 200-DMA. It’s worth noting that the chatters surrounding no imminent relief to the energy markets even if the US-Iran oil deal passes, which has fewer supporting factors of late, seem to have propelled the black gold of late. On the same line were talks of the OPEC+ output cut.

Elsewhere, the US Dollar Index (DXY) rallied to a fresh 19-year high, before stepping back to 108.80, as markets consolidated amid firmer US data and a light calendar, not to forget mixed Fedspeak.

That said, Dallas Fed Manufacturing Business Index improved to -12.9 versus -20.2 expected and -22.6 prior. It should be noted that Minneapolis Federal Reserve Bank President Neel Kashkari stated that people now understand how serious we are about getting inflation back to 2%.

Global central bankers raised economic slowdown fears but refrained from stepping back on the rate hike trajectory, which in turn fuelled the risk-aversion wave in the last two days and portrayed the US Dollar Index (DXY) to a fresh high in late 2002.

Looking forward, a light calendar at home emphasizes US Consumer Confidence for August and comments from Fed speakers as the main catalysts to watch for fresh impulse. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.

Technical analysis

A clear upside break of the 1.3075-80 horizontal hurdle, established in early May, challenges USD/CAD bulls at the six-week high. The pullback moves, however, remain elusive until the quote stays above a 13-day-old support line, near 1.2935.