USD/CAD juggles around 1.3700 as higher oil price outweighs US Dollar’s recovery
- USD/CAD trades back and forth around 1.3700 as oil price rallies due to Middle East conflicts.
- The appeal for the US Dollar improves due to the resilient US economy.
- Investors hope that the Fed is done with hiking interest rates as US core inflation softened as expected.
The USD/CAD pair turns choppy after a sharp rally to near the round-level resistance of 1.3700 in the early New York session. The upside in the Loonie asset seems restricted as the oil price soars due to deepening Israel-Hamas tensions while the downside is well-supported due to a solid recovery in the US Dollar.
The S&P500 opens on a bullish note as investors hope that the Federal Reserve (Fed) is done with hiking interest rates. The appeal for US equities improves while risk-perceived currencies are facing the wrath of deepening slowdown fears.
The US Dollar Index (DXY) is gathering strength to deliver a decisive break above the immediate resistance of 106.60 despite investors hoping that the Fed is done with hiking interest rates. The US economy is performing well on the grounds of the labor market, consumer spending, and service sector while other G7 economies are struggling to cope with higher interest rates from central bankers.
Oil price rallies to near $86.00 on fears that intervention of more Middle-East nations in the Israel-Hamas conflicts would tighten the already tight oil market. It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices strengthen the Canadian Dollar.
Going forward, the Canadian Dollar will be impacted by the inflation data for September, which will be published next week. A hotter inflation report would elevate hopes of one more interest rate increase from the Bank of Canada (BoC).
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.
