USD/CAD run-up crosses 1.3600 as Oil trims recent gains, Canada GDP, Fed’s preferred inflation eyed

• USD/CAD reverses the previous day’s losses, the first in seven, ahead of the key data releases.
• Oil prices retreat from intraday high amid firmer US Dollar, recession woes.
• First Republic Bank, China news recently weigh on sentiment, upbeat US data propel hawkish Fed bets.
• US Core PCE Price Index, Canada’s Monthly GDP eyed for clear directions.

USD/CAD grinds near intraday high after pausing a six-day winning streak the previous day, mildly bid near 1.3620 amid early Friday morning in Europe. In doing so, the Loonie pair takes clues from the broad US Dollar strength ahead of the key data from Canada and the US.

Also likely to favor the Loonie pair buyers is the recent retreat in the WTI crude oil prices, Canada’s main export item. That said, the WTI eases from an intraday high of $75.43 to $75.05 by the press time, mildly bid for the second consecutive day after refreshing the monthly low on Wednesday.

That said, the US Dollar Index (DXY) extends the previous day’s recovery moves while refreshing intraday tops near 101.80, up 0.30% on a day at the latest, as sour sentiment joins hawkish Fed bets.

Among the latest challenges to sentiment are the headlines surrounding the First Republic Bank (FRB) and China. Reuters relies on anonymous sources to convey that officials from the Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve (Fed) are coordinating urgent talks to rescue First Republic Bank.

On the other hand, China’s Envoy to Japan said, “The issue surrounding Taiwan is a red line that should not be crossed.”

It should be observed that the Bank of Japan’s (BoJ) sustained support to the ultra-easy monetary policy, despite the change of Governor, weighed on the yields and allowed the US Dollar to remain firmer. Additionally, upbeat prints of the Gross Domestic Product (GDP) Price Index and Personal Consumption Expenditure (PCE) Prices for the first quarter (Q1) renewed calls for a delay in the Fed’s policy pivot the previous day.

Moving forward, USD/CAD traders are likely to cheer the latest run-up in the prices backed by a risk-off mood and broad US Dollar strength ahead of the key data. That said, the monthly Canada GDP for February, expected to ease to 0.2% from 0.5%, may add strength to the Loonie pair’s upside momentum. However, any negative surprise from the US Core PCE Price Index for March, expected to ease to 4.5% YoY versus 4.6% prior, won’t hesitate to recall the sellers.

Also read: US Core PCE Preview: Why this is a lose-lose situation for the US Dollar

Technical analysis

A clear rebound from the 50-DMA support, around 1.3585 by the press time, joins bullish MACD signals to keep USD/CAD buyers hopeful. However, the monthly high of near 1.3650, followed by a downward-sloping resistance line from early March, near 1.3660 at the latest, can prod the Loonie pair bulls afterward.