USD/CAD bears flirt with 1.2400 as markets struggle for direction, BOC’s Macklem eyed
- USD/CAD wavers around yearly low amid sideways markets.
- Hopes of economic recovery, faster vaccinations battle challenges for further stimulus.
- Pre-Fed caution, light calendar adds to the traders’ misery.
USD/CAD catches a breather around the 1.2400 round-figure during the initial Asian session on Tuesday. In doing so, the quote seeks fresh clues near the year’s bottom.
Although challenges to the previous risk-on mood seem to have stopped the USD/CAD bears of late, upbeat WTI and the US dollar’s broad weakness keeps the pair bears hopeful. However, today’s speech from the Bank of Canada (BOC) Governor Tiff Macklem and the Fed’s monetary policy decision, up for publishing on Wednesday, becomes the key to watch.
Unlike the West, where fast inoculation backs sooner economic recovery, India struggles to overcome the pandemic and keeps drowning the bulls. However, the post-pandemic activity plans by the UK and the US suggest the global leaders are hopeful.
Elsewhere, chatters that US consensus will help Republicans to regain control in the Senate and the West versus China tension weigh on the risk-on mood.
Against this backdrop, S&P 500 Futures rise 0.09% after Wall Street’s mixed closing. Though, the US dollar is yet to market fresh supply and awaits Tokyo open while nearing the lowest levels since early Wednesday.
Although BOC’s Macklem may cheer the Canadian central bank’s tapering, as well as recently strong vaccinations, hints of economic challenges may trigger a corrective pullback by the USD/CAD prices. However, it all depends upon how the US dollar behaves during the pre-Fed markets and the risk catalysts.
Technical analysis
Unless bouncing back beyond February lows near 1.2470, USD/CAD is likely to revisit the yearly low of 1.2365.