USD/CAD holds steady below 1.3500 amid weaker Oil prices, subdued USD demand
|- USD/CAD struggles to attract any meaningful buyers amid a mixed fundamental cue.
- Sliding Crude Oil prices and Friday’s mixed Canadian jobs data undermine the Loonie.
- Bets for a June Fed rate cut keep the USD bulls on the defensive and act as a headwind.
The USD/CAD pair struggles to capitalize on Friday's goodish rebound from the 1.3420 region, or a nearly one-month low and oscillates in range on the first day of a new week. The pair trades around the 1.3480 area, nearly unchanged for the day during the Asian session, and is influenced by a combination of diverging forces.
Crude Oil prices drift lower for the second straight day and retreat further from over a four-month peak set earlier this March amid concern about slowing demand in China, exacerbated by underwhelming import data for the first two months of 2024. Furthermore, mixed Chinese inflation data add to market worries and overshadow a tighter supply outlook. This continues to weigh on the black liquid, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair.
The Canadian Dollar (CAD) is further pressured by slowing domestic wage growth in February, to its lowest level since June, and an uptick in the unemployment rate. Meanwhile, the simultaneous release of the US jobs report pointed to a spike in the jobless rate to the highest level in two years reaffirmed bets that the Federal Reserve (Fed) will start cutting interest rates in June. This fails to assist the US Dollar (USD) to build on its recovery from a nearly one-month low and caps the upside for the USD/CAD pair.
The mixed fundamental backdrop warrants some caution for bullish traders and before positioning for any meaningful appreciating move for the currency pair. Market participants might also prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures on Tuesday, which might influence the Fed's rate-cut path and drive the USD demand in the near term. This, along with Oil price dynamics, should help determine the next leg of a directional move for the USD/CAD pair.
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