- USD/CAD holds steady near a one-month top and draws support from a combination of factors.
- Bearish oil prices continue to undermine the Loonie and act as a tailwind amid a stronger USD.
- Bulls, however, seem reluctant and prefer to wait for the BoC decision before placing fresh bets.
The USD/CAD pair oscillates in a narrow trading band near mid-1.3600s on Wednesday and consolidates its recent gains to a one-month high touched the previous day.
Traders now seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the latest monetary policy update from the Bank of Canada (BoC). The Canadian central bank is scheduled to announce its decision later during the early North American session and is widely expected to hike interest rates by 50 bps. The focus, meanwhile, will be on the accompanying rate statement, which will influence the domestic currency and provide some meaningful impetus to the USD/CAD pair.
In the meantime, a combination of factors continues to act as a tailwind for spot prices and limits a modest intraday downtick to the 1.3630 area. Crude oil prices remain depressed for the fourth straight day and languished near the YTD low amid worries that a deeper global economic downturn will hurt fuel demand. This, in turn, is seen undermining the commodity-linked Loonie and lending support to the USD/CAD pair amid some follow-through US Dollar buying, bolstered by hawkish Fed expectations.
Friday's better-than-expected US jobs report (NFP), especially an upside surprise in wage growth data, points to the possibility of a further rise in inflationary pressures. Adding to this, the upbeat US ISM Services PMI released on Monday suggested that the economy remained resilient despite rising borrowing costs. This, in turn, fuels speculations that the Fed might lift rates more than projected, which lends support to the buck and adds credence to the positive outlook for the USD/CAD pair.
Hence, any meaningful corrective pullback is more likely to attract fresh buyers and remain limited. The USD/CAD pair seems poised to prolong its recent upward trajectory and aim to reclaim the 1.3700 round-figure mark. The positive momentum could get extended towards the next relevant barrier, around the 1.3740 supply zone.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.