USD/CAD stabilizes below 1.2900 as investors await weak US Durable Goods Orders
|- USD/CAD is establishing below 1.2900 on an expectation of weak performance from the DXY.
- A downbeat US Durable Goods Orders after weak PMI figures will drag the greenback bulls.
- Oil prices are displaying a minor rebound, downside remains favored on soaring recession fears.
The USD/CAD pair is auctioning below the round-level support of 1.2900 on expectations of a vulnerable performance from the US Durable Goods Orders. The asset traded in a range of 1.2907-1.3017 last week and gave a downside break in the last trading hours of Friday’s session. A carry-forward performance is expected from the asset as the greenback will remain under pressure on lower expectations from the US Durable Goods Orders data.
A preliminary estimate for the economic data is 0.1%, significantly lower than the prior print of 0.5%. An underperformance from the catalyst will strengthen the loonie. It is worth noting that the spell of the underperformance from the US economy on the economic events front will keep the greenback under significant pressure.
Last week, the downbeat Manufacturing and Services PMI dictated the consequences of firmer price pressures, which have started cornering consumer confidence. A continuation of underperformance in the economic indicators will send the US dollar index (DXY) into a negative trajectory for a prolonged period.
Meanwhile, the odds of consecutive 50 basis points (bps) interest rate hike by the Bank of Canada (BOC) have increased sharply. Last week, the release of the Canada Consumer Price Index (CPI) at 7.7% on a YoY basis has dictated that the BOC’s policy tightening measures from the past few months have failed to bring a significant impact on the price pressures. Therefore, one more jumbo rate hike by the BOC looks visible now.
On the oil front, a rebound in the oil prices was recorded last week. The black gold has picked some bids after slipping near the psychological support of $100.00. The market participants are discounting the impact of recession in the oil prices currently and a reversal in the oil prices is not been confirmed yet.
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