- USD/CAD kicks off the new week on a weaker note, though shows resilience below 1.3400.
- Rallying Oil prices underpins the Loonie and exerts some downward pressure on the major.
- A modest USD bounce from a multi-month low help limit losses, at least for the time being.
The USD/CAD pair comes under heavy selling pressure on Monday and drops to over a one-week low, though shows some resilience below the 1.3400 mark. Spot prices, however, remain in the negative territory and now seem to have stabilized around the 1.3420-1.3425 region heading into the North American session.
Crude Oil prices rally nearly 2.5% on the first day of a new week in reaction to the OPEC+ decision to cut output by 2 million barrels per day from November through 2023. Adding to this, positive signs for fuel demand recovery in China, amid the easing of strict COVID-19 curbs, boost the black liquid. This, in turn, underpins the commodity-linked Loonie and exerts some downward pressure on the USD/CAD pair.
The downside, however, remains cushioned amid an intraday US Dollar recovery from its lowest level since late June touched earlier this Monday. Worries about a deeper global economic downturn continue to weigh on investors' sentiment, which is evident from a weaker tone around the equity markets. This, along with an uptick in the US Treasury bond yields, offers some support to the safe-haven buck.
The upbeat US monthly jobs report (NFP) released on Friday and an upside surprise in wages point to a further rise in inflationary pressures. The data reaffirmed expectations that the US central bank will continue to tighten its monetary policy and validates Federal Reserve Chair Jerome Powell's forecast that the peak interest rate will be higher than expected. This, in turn, is seen acting as a tailwind for the US bond yields.
That said, the recent comments by several FOMC Officials support prospects for relatively smaller interest rate hikes by the US central bank. This, in turn, is holding back the USD bulls from placing aggressive bets and should keep a lid on any meaningful recovery for the USD/CAD pair. Next on tap is the release of the US ISM Services PMI, which might influence the USD and provide some trading impetus.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD hovers around 1.0700 after German IFO data
EUR/USD stays in a consolidation phase at around 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price trades with mild negative bias, manages to hold above $2,300 ahead of US data
Gold price (XAU/USD) edges lower during the early European session on Wednesday, albeit manages to hold its neck above the $2,300 mark and over a two-week low touched the previous day.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.