- USD/CAD drops to 1.3650 on multiple headwinds.
- Firm speculation for Fed rate cuts in September has uplifted the market mood.
- A sharp recovery in the Oil price improves the Canadian Dollar’s appeal.
The USD/CAD pair falls after failing to recapture the crucial resistance of 1.3700 in Monday’s early New York session. The Loonie asset slips to 1.3650 due to multiple headwinds: a decline in the US Dollar and a sharp recovery in the Oil price.
Market sentiment is quite bullish, as investors’ confidence in the Federal Reserve (Fed) reducing interest rates from the September meeting has improved. The S&P 500 opens on a bullish note, exhibiting a higher risk appetite. The scenario of the Fed pivoting to interest rate cuts is unfavorable for bond yields. 10-year US Treasury yields have come down below the crucial support of 4.50%.
The US Dollar Index (DXY) struggles for a firm footing above 105.00 as weak United States economic data has raised concerns over the economic outlook. The US Nonfarm Payrolls (NFP) and the Services PMI data for April showed that labor demand was weak, the Unemployment Rate rose to 3.9%, wage growth slowed, and Services PMI fell to an almost 16-month low of 49.4. These conditions indicate that the economy is failing to cope with the Fed’s restrictive framework.
Meanwhile, the Canadian Dollar gains as the Oil price rebounds from $77.75. West Texas Intermediate (WTI), futures on NYMEX, ends its six-day losing spell as investors worry about geopolitical risks. Israel is expected to extend operations in Rafah, the southern part of Gaza, as prospects for a Gaza ceasefire appear slim. On Sunday, Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages but Israeli Prime Minister Benjamin Netanyahu flatly ruled that out, Reuters reported.
It is worth noting that Canada is the leading exporter of Oil to the US and higher Oil prices strengthen the Canadian Dollar.
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 retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.