USD/CAD: Prints three-day uptrend near 1.2750 as risk aversion favors USD, WTI eases

• USD/CAD attacks intraday top while keeping recovery moves from 1.2687.
• Risks turned heavy amid US stimulus gridlock, WTI drops as US President Biden is up for challenging energy firms.
• Risk catalysts keep driver’s seat amid a light calendar.

USD/CAD rises to 1.2750, up 0.05% intraday, during early Tuesday. The loonie pair tracks the US dollar’s gains, as well as recent declines in energy prices, while portraying a three-day winning streak near a one-week high.

Behind the US dollar gains are the chatters over likely delay in the US President Joe Biden’s $1.4 trillion fiscal stimulus. The expectations for an extra lag gained momentum after the Senate Majority Leader Chuck Schumer said, “Will try to pass stimulus in a month, month-and-a-half.”

On the risk-positive side were the coronavirus (COVID-19) vaccine updates from Moderna and AstraZeneca suggesting the cure to the variants from the UK and South Africa. Also trying to improve the mood could be an Israeli report signaling a notable improvement in the health conditions after two jabs of the vaccine.

Against this backdrop, S&P 500 Futures drop 0.40% while the US 10-year Treasury yields look for clear signals near 1.04% by press time. Further, stocks in Asia-Pacific also trade mixed amid uncertainty over the much-awaited market relief from America.

It’s worth mentioning that Canada gains heavily from oil exports and hence the latest drop in WTI, currently down 0.50% to $52.50, also weighs on the Canadian dollar and propels the USD/CAD prices. Behind the oil loss are the US dollar’s gains and the New York Times news saying, “President Biden on Wednesday will direct federal agencies to determine how expansive a ban on new oil and gas leasing on federal land should be, part of a suite of executive orders that will effectively launch his agenda to combat climate change, two people with knowledge of the president’s plans said Monday.”

Given the lack of major data/events on the calendar ahead of Wednesday’s FOMC and Thursday’s US Q4 GDP, USD/CAD traders may keep extending the prevalent trend with a less pace. However, any surprise news concerning energy and/or US stimulus shouldn’t be ignored.

Technical analysis

A clear break of the five-week-old falling trend line, at 1.2750 now, becomes necessary to direct USD/CAD bulls towards 50-day SMA near 1.2815.