- A combination of factors weighed on USD/CAD for the third consecutive session on Thursday.
- Bullish oil prices underpinned the loonie and exerted pressure amid a subdued USD demand.
- Rising bets for an early Fed rate hike acted as a tailwind for the USD and should lend support.
The USD/CAD pair dropped to over three-month lows during the early European session, with bears now eyeing a break below the 1.2400 round-figure mark.
Crude oil prices held steady near multi-year tops and continued underpinning the commodity-linked loonie. This, in turn, was seen as a key factor that dragged the USD/CAD pair lower for the third consecutive session on Thursday amid a subdued US dollar price action. The longer-dated US Treasury bond yields declined further following a slightly higher than estimated US CPI print, suggesting that the market is still not convinced about a sustained period of inflation. This was seen as a key factor that kept the USD bulls on the defensive.
That said, prospects for an early policy tightening by the Fed helped limit any deeper USD losses, though did little to impress bulls or lend any support to the USD/CAD pair. The minutes of the FOMC monetary policy meeting held on September 21-22 revealed that the US central bank remains on track to begin tapering its bond purchases in 2021. Moreover, a growing number of policymakers were worried about the continuous rise in inflationary pressures, forcing investors to bring forward the likely timing of a potential interest rate hike.
The markets now seem to have started betting on the possibility of the so-called lift-off in September 2022 as against December 2022 already priced in. This was reinforced by an uptick in the US bond yields, which should help revive the USD demand and act as a tailwind for the USD/CAD pair. Even from a technical perspective, the pair has managed to defend support marked by the lower end of a four-week-old descending trend channel. This makes it prudent to wait for a sustained weakness below the mentioned support before placing fresh bearish bets.
Market participants now look forward to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims. This, along with the US bond yields and scheduled speeches by influential FOMC members, will drive the USD demand. Apart from this, traders might further take cues from the official US crude inventories data, which will influence oil price dynamics and provide a fresh impetus to the USD/CAD pair.
Technical levels to watch
|Today last price||1.2405|
|Today Daily Change||-0.0037|
|Today Daily Change %||-0.30|
|Today daily open||1.2442|
|Previous Daily High||1.2479|
|Previous Daily Low||1.243|
|Previous Weekly High||1.2655|
|Previous Weekly Low||1.2452|
|Previous Monthly High||1.2896|
|Previous Monthly Low||1.2494|
|Daily Fibonacci 38.2%||1.2449|
|Daily Fibonacci 61.8%||1.246|
|Daily Pivot Point S1||1.2422|
|Daily Pivot Point S2||1.2402|
|Daily Pivot Point S3||1.2374|
|Daily Pivot Point R1||1.2471|
|Daily Pivot Point R2||1.2499|
|Daily Pivot Point R3||1.2519|
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.