USD/CAD jumps above 1.2300 amid US dollar rebound, WTI pullback
- USD/CAD snaps a two-day downtrend as USD attempts a bounce.
- Risk-off mood extends into Europe amid renewed China Evergrande fears.
- WTI retreats from seven-year tops, undermines CAD, supporting the pair.
USD/CAD is staging a decent comeback from four-month lows of 1.2289, heading towards 1.2350, in response to a broad-based rebound in the US dollar.
The greenback is finding its feet against its major rivals, bouncing from three-week lows, as the risk appetite takes a hit amid the re-emergence of China Evergrande default fears after the indebted property development giant failed to clinch a property sale deal with Hopson Development Holdings.
Further, global energy crunch combined with rising inflationary pressures continues to sap investors’ confidence, putting a floor under the greenback’s recent corrective decline.
On the other hand, the risk-off market profile is weighing negatively on the higher-yielding WTI, as it retreats from fresh seven-week highs of $83.71, currently down 0.70% at $82.80. The pullback in oil prices is weighing on the resource-linked loonie, aiding the recovery in the currency pair.
Despite the rebound, risks remain skewed to the downside for USD/CAD, as hotter Canadian inflation data fans sooner-than-expected rate hike bets from the Bank of Canada (BOC). The country’s annual Consumer Price Index (CPI) rose by 4.4% in September vs. 4.3% expected.
Next of relevance for the major remains the US weekly Jobless Claims data and Fedspeak while the sentiment on the Wall Street will be closely followed amid the Q3 earnings season.
USD/CAD: Technical levels to watch out
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
