USD/CAD inter-markets: further weakness in oil should assist the pair to reclaim 1.30 handle

Extending Friday's rebound from 8-week low, the USD/CAD pair has reclaimed 1.2900 handle but is seen struggling to move back above 100-day SMA resistance near 1.2930 region.

Maintaining its high degree of correlation, retracement in WTI crude oil prices from nearly 2-month highs is inducing weakness in commodity-linked currency - loonie. Adding to this, Friday's disappointing Canadian retail sales and CPI data is also seen weighing on the Canadian Dollar and helping the major to extend its recovery trend. 

Moreover, recent comments from Fed officials seem to have revived prospects of an eventual Fed rate-hike, as is depicted by the CME group's FedWatch tool. Furthermore, narrowing gap between the US and Canadian 10-years Treasury bond yields is also supportive of the pair's ongoing recovery. 

Additional up-move, however, was limited as investors remain cautious and await for the Fed Chairwoman Janet Yellen's speech at the annual symposium in Jackson Hole on Friday, which might provide fresh clues over the central bank's monetary policy outlook and eventually help drive the greenback in the near-term.

In the meantime, any further weakness in crude oil prices would continue to dent demand for the Canadian Dollar and could assist the pair to move back above 100-day SMA resistance and aim towards reclaiming 1.3000 psychological mark resistance.