The Loonie pair ignores recently downbeat oil prices amid sluggish markets.
Despite matching wide market forecasts of inaction, the Bank of Canada (BOC) conveyed economic fears amid the fourth wave of the coronavirus. The same propelled the USD/CAD prices even as firmer WTI tried to discourage the bulls.
WTI oil prices portrayed the first positive day in three on Wednesday amid chatters over delayed production in the gulf. However, the oil benchmark lost the upside momentum following a higher-than-previous inventory data from the American Petroleum Institute (API), -2.88M versus -4.045M. WTI’s latest weakness could be linked to the firmer US dollar and downbeat market sentiment due to the covid fears.
In addition to the dovish BOC and oil prices, the risk-off mood also underpins the US dollar’s safe-haven demand and backs the USD/CAD buyers. Signals concerning further prices hikes and strong jobs market, as recently hinted by the Fed Beige Book and JOLTS Job Openings, joined the coronavirus woes to fade the post-Jackson Hole optimism. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid. On the same line were the doubts over US President Joe Biden’s six-pronged strategy, up for publishing on Thursday, as well as the US covid stimulus package.
USD/CAD Long (Buy)
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