USD/CAD jumps to over one-week high amid strong intraday USD rally, tumbling Oil prices

The USD/CAD pair catches aggressive bids following a brief consolidation on Friday and extends its strong rally heading into the North American session. The momentum lifts spot prices to over a one-week high, closer to the 1.3800 mark, and is sponsored by a combination of factors.

The global risk sentiment took a turn for the worst on the last day of the week amid lingering concerns over a full-blown banking crisis. Apart from this, the rather unimpressive flash PMI prints from the Eurozone and the United Kingdom (UK) revived fears of a deeper economic downturn, which, in turn, tempers investors' appetite for riskier assets. The anti-risk flow lifts demand for the safe-haven US Dollar (USD) and turns out to be a key factor acting as a tailwind for the USD/CAD pair.

Furthermore, worries that a global recession will dent fuel demand triggers a fresh bout of selling around Crude Oil prices and weighs on the commodity-linked Loonie. Apart from this, the softer-than-expected Canadian consumer inflation released on Tuesday reaffirmed expectations that the Bank of Canada (BoC) will refrain from raising interest rates any further. This further seems to undermine the Canadian Dollar and contributes to the USD/CAD pair's strong intraday rally.

With the latest leg up, spot prices now seem to have confirmed a breakout through a one-week-old trading range and seem poised to appreciate further. That said, tumbling US Treasury bond yields, led by the Federal Reserve's hints of a pause to interest rate hikes, could act as a headwind for the Greenback. This, along with the disappointing release of the US Durable Goods Orders data, might hold back bullish traders from placing aggressive bets around the USD/CAD pair.

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