The USD/CAD pair extended its steady intraday ascent through the mid-European session and climbed to the 1.3045 area, back closer to the YTD peak in the last hour.
A combination of supporting factors assisted the USD/CAD pair to build on the overnight goodish rebound from the 1.2920 area and gain some follow-through traction on Thursday. Firming expectations for a more aggressive policy tightening by the Fed pushed the US dollar to its highest level in nearly two decades. Apart from this, sliding crude oil prices undermined the commodity-linked loonie and acted as a tailwind for the major.
Despite signs that inflationary pressures in the world's biggest economy are peaking, investors seem convinced that the Fed will stick to its rate hike cycle. In fact, money market futures are now pricing in an 81% chance of a jumbo 75 bps rate hike in June amid concerns that China's zero-covid policy and the war in Ukraine would push consumer prices even higher. This, along with the risk-off mood, further benefitted the safe-haven buck.
Worries that fast-rising inflation will drive a sharp rise in interest rates and bring the global economy to a standstill tempered investors' appetite for perceived riskier assets. Apart from growing recession fears, strict Covid-19 lockdowns in China raised concerns about slowing fuel demand. Adding to this, a delay in the approval of the European Union's proposed phased embargo on Russian oil weighed on crude oil prices.
It, however, remains to be seen if bulls can capitalize on the move or if the USD/CAD pair meets with a fresh supply at higher levels, warranting some caution before positioning for any further gains. Market participants now look forward to the US Producer Price Index (PPI), which, along with the US bond yields and the broader risk sentiment, will influence the USD. Traders will further take cues from oil price dynamics to grab some short-term opportunities.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.