USD/CAD finds bids around 1.3500 amid risk aversion theme, oil aims to recapture $80.00
- USD/CAD has attempted a recovery after dropping below 1.3500 as the risk-off mood has regained traction.
- Firmer oil prices led by growing supply worries as Russia bans oil supply have supported the Canadian Dollar.
- The 10-year US Treasury yields have jumped to near 3.85% amid the risk aversion theme.
The USD/CAD pair has sensed buying interest after dropping to near 1.3500 in the early Asian session. The Loonie asset has picked strength as the risk-aversion theme is gaining traction amid volatility in a festive week. The major has shown signs of reversal after displaying a perpendicular downside move on Tuesday as firmer oil prices supported the Canadian Dollar.
The risk profile is highly obscure amid the unavailability of solid triggers for decisive moves in the currency market. Also, easing lockdown restrictions for inbound travelers in China failed to uplift the market mood. S&P500 remained under pressure on Tuesday as tech-savvy stocks faced immense heat. The US Dollar Index (DXY) has turned sideways around 103.80 after failing to cross the crucial resistance of 104.00.
Meanwhile, the risk aversion theme led by illiquid markets due to the festive week is impacting the US Treasury bonds. The 10-year US Treasury yields have jumped to near 3.85%.
The Canadian Dollar hogged the limelight on firmer oil prices. West Texas Intermediate (WTI) futures have dropped marginally but have resumed their upside journey and are expected to recapture the critical resistance of $80.00 led by growing supply worries and China’s progress towards reopening of the economy despite a spike in Covid cases.
Oil supply worries escalated after Russian President Vladimir Putin signed a decree that bans the sale of Russian oil to countries that imposed the oil price cap.
On the United States front, Thomas M. Mertens, a Researcher from the Federal Reserve (Fed) Bank of San Francisco’s Economic Research Department came out with a recession predictor based on macroeconomic time series, particularly the jobless unemployment rate. He cited that no predictors indicate an upcoming recession over the next two quarters currently. And, the jobless rate does not currently signal an impending recession.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
