USD/CAD drivers shift between the domestic economy, commodities and the general risk trade.
Today's broader market price action put commodities and the general risk trade at odds. Oil fell hard on better news out of Ukraine while overall risk trades rallied on hopes for peace.
At first, the oil trade won out as USD/CAD jumped to 1.2775 from 1.2725 but the pair has slowly given it all back. For one, oil prices had a small rebound and stabilized but more importantly might be the bounce in overall risk trades. The S&P 500 is up 63 points and testing the earlier session high.
The failed high today is a fourth test of 1.28 that has failed and that could be telling but with all eyes on Ukraine, it will be interesting to see how the loonie performs if oil falls and risk trades continue to improve. My bet is that ends up being CAD-positive, though AUD or GBP is probably a better bet if that's your base case.