USD/CAD trims the intraday gains near 1.3580 on surging Crude prices
|- USD/CAD rebounds from intraday gains as Crude prices attempt to extend gains.
- WTI prices could receive buying support due to the Middle-East tensions.
- Fed’s remarks led investors to downplay the likelihood of additional rate hikes.
USD/CAD has almost trimmed the intraday gains, struggling to break the three-day losing streak. The spot price trades around 1.3580 during the European session on Tuesday.
The pair is facing challenges as oil prices have rebounded from intraday losses and appear poised to extend their gains further.
Western Texas Intermediate (WTI) oil price hovers around $85.00 at the time of writing on Tuesday. Crude oil prices have experienced their most significant increase in six months, reaching $86.01 per barrel on Monday.
Middle-East tensions persist, contributing to elevated Crude Oil prices, which is contributing support to the Canadian Dollar (CAD) as Canada is the largest exporter of Crude oil to the United States (US).
On Saturday, Hamas launched an attack on Israel using land, air, and sea forces. In response, the Israeli army has initiated a robust counteroffensive in Gaza, marking the most severe military conflict in the region to date.
The US Dollar Index (DXY) loses its ground and trades lower around 105.80 to extend losses, by the press time. The US Dollar (USD) is facing challenges despite the improved US Treasury yields on the day, with the 10-year US Treasury bond yield holding up at 4.67% at the current press time.
Furthermore, statements from Federal Reserve (Fed) officials overnight caused investors to minimize the chances of more rate hikes, which led to a decline in US bond yields in the previous session. As a result, this development is seen as undermining the strength of the Greenback.
Lori Logan, president of the Dallas Fed, hinted at a reduced need to raise the Fed funds rate, while Fed Vice Chair Philip Jefferson emphasized the importance of the central bank proceeding cautiously with any additional policy rate increases.
This week, investors will closely watch economic data, particularly focusing on inflation figures. The Producer Price Index (PPI) is scheduled for Wednesday, followed by the release of the FOMC meeting minutes and the Consumer Price Index (CPI) on Thursday.
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