• USD/CAD hangs in balance after declining the most in a week, snapping four-day uptrend.
• WTI posted the biggest daily jump in a month on fears of EU’s oil embargo on Russia, ignoring EIA inventories.
• USD grinds higher post-hot inflation data, risk catalysts will be eyed for immediate directions.
• US Jobless Claims, PPI, BOC’s Gravelle decorate calendar.

USD/CAD struggles to keep bears on the board after inviting them for a feast as prices of oil fade upside momentum while markets struggle for fresh clues during Thursday’s Asian session. That said, the quote seesaws around 1.3000 after positing the first negative daily closing in five, not to forget mentioning the pullback from the highest levels since November 2020.

WTI crude oil, Canada’s biggest export item, rallied the most in a month the previous day as European policymakers brace for the sixth round of sanctions on Russia, highlighting a total ban on the bloc’s energy import from Moscow in the next six months. The geopolitical fears also joined uncertainties over the Iran output deal and OPEC+ restrain to increase production, from what’s already known, to propel the energy prices.

While cheering the positive, the black gold paid a little heed to the weekly official oil inventory data from the Energy Information Administration (EIA), 8.487M versus -0.457M expected and 1.302M prior.

On a different page, the US inflation data for April failed to please the greenback buyers, despite crossing the forecasts. The reason could be linked to the mixed comments from the Federal Reserve (Fed) officials as well as a lack of market confidence in the latest data and Fedspeak.

That said, the headline Consumer Price Index (CPI) rose to 8.3% YoY versus 8.1% expected and 8.5% prior. More importantly, the CPI ex Food & Energy, better known as Core CPI, crossed 6.0% forecasts with 6.2% annual figures, versus 6.5% previous readouts.

Following the data, Fedspeak turned out to be mixed as the previously hawkish Federal Reserve Bank of St. Louis James Bullard mentioned that he ''won't emphasize single inflation report too much but inflation is more persistent than many have thought.'' However, Cleveland Fed President and FOMC member Loretta Mester previously recalled the bears as she said, “They don't rule out a 75 basis points rate hike forever”.

Against this backdrop, equities initially rose before ending in the red while the US Treasury yields also rose past 3.0% before ending Wednesday at a one-week low of 2.92%. It’s worth observing that S&P 500 Futures print mild gains by the press time.

Looking forward, weekly prints of the US Jobless Claims and monthly Producer Price Index (PPI) could join a speech from the Bank of Canada (BOC) Deputy Governor Toni Gravelle to direct short-term moves. Given the lackluster moves, coupled with the old fears of inflation and growth, USD/CAD may regain upside momentum in absence of any major positive for oil prices.

Technical analysis

Failure to cross a monthly resistance line, around 1.3065 by the press time, triggered USD/CAD declines the previous day. The pullback moves, however, remain elusive until staying beyond March’s high of 1.2900.