USD/CAD: Mildly bid within weekly trading range near 1.3400 on sluggish Oil price, softer US inflation

• USD/CAD renews intraday high while staying unchanged on weekly basis.
• Softer US inflation contrasted with upbeat Canada Building Permits to favor Loonie bears previously.
• Market’s positioning for more inflation clues, softer WTI crude oil price amid downbeat China CPI/PPI prod USD/CAD bears.

USD/CAD pares the previous day’s losses inside the weekly trading range surrounding 1.3400 amid early Thursday, mildly bid when refreshing intraday high near 1.3385 by the press time.

That said, the Loonie pair’s latest gains could be linked to the downbeat Oil price and the US Dollar’s consolidation of inflation-led losses ahead of the US Producer Price Index (PPI) for April. However, the pair sellers remain hopeful amid dovish from the US Federal Reserve (Fed), especially after the previous day’s downbeat US Consumer Price Index (CPI) details.

WTI crude oil holds lower grounds near $72.80 following its pullback from a weekly top the previous day. In doing so, the black gold justifies softer inflation data from China and the US amid mixed sentiment and the price-negative Oil inventories. It’s worth noting that WTI crude oil is Canada’s biggest export item and hence any change in the Oil price can move the USD/CAD pair.

At home, Canada’s Building Permits jumped 11.3% MoM in March versus -2.9% market forecasts and downwardly revised prior readings of 5.5%. Recently, wildfires pushed Alberta towards halting the Oil refineries before resuming operations on Wednesday, which in turn might have allowed the Canadian Dollar (CAD) to remain firmer despite the latest USD rebound.

Talking about the data, China’s headline Consumer Price Index (CPI) eases to 0.1% YoY from 0.7% prior, versus 0.3% expected, while the Producer Price Index (PPI) slides to -3.6% YoY compared to -3.2% market consensus and -2.5% previous readings. On the other hand, US Consumer Price Index (CPI) eased to 4.9% YoY for April versus market expectations of reprinting 5.0% inflation mark, marking the first below 5.0% print in two years. The MoM figures, however, matched the upbeat 0.4% forecasts compared to 0.1% previous readings. Further, the CPI ex Food & Energy, known as the core CPI, matched 5.5% and 0.4% market consensus on a yearly and monthly basis respectively versus 5.6% and 0.4% priors in that order.

Amid these plays, the S&P 500 Futures print mild gains and the US Treasury bond yields extend the previous day’s downbeat performance, which in turn weighs on the US Dollar Index (DXY).

Looking forward, a light calendar in Canada and cautious mood ahead of the key Bank of England (BoE) quarterly monetary policy report join mixed feelings for the US debt ceiling and banking fallouts to highlight the US PPI as an important catalyst to watch for the USD/CAD pair traders.

Technical analysis

A three-month-old ascending support line, near 1.3360 by the press time, defends USD/CAD buyers.