USD/CAD hits multi-day tops above 1.2750 amid stronger USD, WTI’s drop

• USD/CAD extends recovery from multi-month lows.
• Firmer T-yields-led USD demand and WTI weakness underpin.
• Focus on BOC’s Business Outlook survey, stimulus updates.

USD/CAD is off the five-day highs of 1.2764, although remains strongly bid amid unabated US dollar’s demand and the weakness in oil prices.

The US dollar receives doubt booster shots amid the ongoing surge in the US Treasury yields, as the optimism over additional stimulus coming from Biden’s presidency pushes inflation expectations higher.

Further, the safe-haven greenback also cheers the tepid risk sentiment, induced by the renewed tensions between the US and China over America’s latest move to improve ties with Taiwan.

On the CAD-side of the story, a 1% drop in WTI prices appears to be boding ill for the resource-linked Loonie, in turn collaborating with the upside in USD/CAD. The black gold tripped this Monday amid renewed coronavirus concerns, as the covid cases globally continue growing.

Attention now turns towards the developments around the US stimulus and the Bank of Canada (BOC) Business Outlook Survey for fresh trading impetus. Also, of note will be the speeches by Fed’s Bostic and Kaplan.

USD/CAD technical levels