USD/CAD Recovers Around 1.3350 As Oil Bulls Rest And US Inflation Is Watched

USD/CAD recovers after a five-week low. Loonie bears entered after a strong Canada jobs report and higher oil prices. Before the US CPI, hawkish Fed discussions and positive US data test pair sellers.

After plummeting the most in five weeks the day before, USD/CAD oscillates about the mid-1.3300s in the early Asian session on Monday. The Loonie pair shows market consolidation ahead of the US Consumer Price Index (CPI) data amid mixed US signals.

After a solid Canada jobs report and rising WTI crude oil prices, the Loonie pair fell the most since early January.

Despite market buzz that Russia may decrease its oil output by 500,000 barrels in March to counter European sanctions, WTI crude oil reached a new monthly high of $80.48 the day before.

Canada's January Net Change in Employment rose to 150K from 15K predicted and 69.2K revised. Unemployment was 5.0% instead of 5.1%.

As indicated by BoC Governor Tiff Macklem's dovish comments, the firmer Canada jobs report makes it difficult for the BoC to suspend its rate hike trajectory, favoring USD/CAD bears.

However, preliminary US University of Michigan (UoM) Consumer Sentiment for February improved to 66.4 from 65.0 projected and 64.9 before. The UoM reported that year-ahead inflation estimates rose to 4.2% this month from 3.9% in January and 4.4% in December. “Long-run inflation forecasts (5-year) remained at 2.9% for the third consecutive month and held within the tight 2.9-3.1% range for 18 of the last 19 months,” said UoM. Based on updated seasonal adjustment variables, the US Bureau of Labor Statistics increased the December Consumer Price Index (CPI) to +0.1% from -0.1% on Friday.

The recent contradictory statements from Richmond Federal Reserve (Fed) President Thomas Barkin and the US-China tussles over the "unidentified" objects seem to challenge sentiment and support the USD due to its haven appeal.

S&P 500 Futures decline as US Treasury bond rates rise, favoring the US Dollar and USD/CAD buyers ahead of crucial US inflation data.

Due to Fed policy pivot rumors, USD/CAD traders should watch risk catalysts ahead of Tuesday's US Consumer Price Index (CPI) for January.