The USD/CAD pair attracted fresh buying near the 1.2990 area on Tuesday and turned positive for the second straight day. The pair built on its steady ascent through the early European session and climbed back closer to mid-1.3000s, or a fresh daily high in the last hour.
Fresh COVID-19 curbs in China, along with growing recession fears, raised concerns about the fuel demand outlook and weighed on crude oil prices. This, in turn, undermined the commodity-linked loonie and pushed the USD/CAD pair higher amid sustained US dollar buying.
The FOMC minutes released last week reaffirmed bets for a faster policy tightening by the Fed. In fact, policymakers emphasized the need to fight inflation even if it results in an economic slowdown. This was seen as a key factor that continued boosting the greenback.
The worsening global economic outlook led to an extended selloff in the equity markets, which further benefitted the safe-haven buck. This, to a larger extent, helped offset declining US Treasury bond yields and pushed the USD to a fresh two-decade high on Tuesday.
It would now be interesting to see if the USD/CAD pair is able to capitalize on the move or meet with a fresh supply at higher levels. Traders might refrain from placing aggressive bullish bets and prefer to move on the sidelines ahead of this week's key event/data risk.
The US consumer inflation figures are due for release on Wednesday, which will be followed by the Bank of Canada monetary policy decision. Traders will further take cues from the US Retail Sales data and the Prelim Michigan Consumer Sentiment, scheduled on Friday.
In the meantime, the broader market risk sentiment would continue to drive the USD demand amid absent relevant market moving-economic data. Apart from this oil price dynamics should provide some impetus to the USD/CAD pair and allow traders to grab 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.