USD/CAD looks downside below 1.2720, oil sustains above $115.00, BOC in focus


  • USD/CAD is bracing a sheer downside move below 1.2718 ahead of hawkish BOC.
  • Canada’s CPI at 6.9% is compelling a jumbo rate hike by the BOC this week.
  • The DXY is likely to dance to the tunes of the US NFP.

The USD/CAD pair is oscillating in a narrow range of 1.2718-1.2728 in the early Asian session. The loonie bulls remained favored last week after the asset tumbled below the critical support of 1.2765 on Friday. A downside move below 1.2765 has opened doors for 1.2700 as technical downside will be accompanied by the interest rate decision from the Bank of Canada (BOC), which is due on Wednesday.

Citing the inflationary pressures in the loonie region, the BOC is expected to remain extremely hawkish in its monetary policy announcement. The April inflation rate landed at 6.9%, above the forecasts of 6.7% and more than a two-decade high. Mounting price pressures are impacting the real income of the households and eventually, the BOC is left with no other choice than to dictate a rate hike.  As per the market consensus, the BOC is expected to elevate the interest rates by 50 basis points (bps). This may be a consecutive jumbo rate hike as the BOC also announced a half-a-percent rate hike in April.

On the oil front, boiling oil prices are supporting loonie. Mounting supply worries due to expectations of an embargo on Russian oil from Europe have kept the oil prices in the grip of bulls. Apart from that, the demand is expected to revive in China as the Chinese administration is expected to lift complete Covid-19 restrictions in Shanghai. The black gold is expected to remain established above $115.00 ad higher oil prices will fetch more funds into the loonie’s economy.

On the dollar front, the US dollar index (DXY) is consolidating below 101.70. The DXY will remain highly uncertain this week ahead of the release of the US Nonfarm Payrolls (NFP). The US economy may report an addition of 310k jobs in the labor market against the prior print of 428k.

 

 

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.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 0.9800 after US inflation data

EUR/USD stays below 0.9800 after US inflation data

EUR/USD continues to trade in negative territory below 0.9800 in the American session on Friday. The data from the US showed that the annual PCE inflation declined to 6.2% in August but the stronger-than-expected core reading didn't allow the pair to gain traction.

EUR/USD News

GBP/USD rebounds from daily lows, reclaims 1.1100

GBP/USD rebounds from daily lows, reclaims 1.1100

GBP/USD fell to a fresh daily low below 1.1030 but managed to reverse its direction and climbed above 1.1100 during the American trading hours on Friday. The pair remains on track to snap a two-week losing streak despite having suffered heavy losses earlier in the week.

GBP/USD News

Gold extends daily rally beyond $1,670

Gold extends daily rally beyond $1,670

Gold preserved its bullish momentum and rose above $1,670 after the mixed inflation data from the US on Friday. The benchmark 10-year yield is down more than 2% as markets look to wrap up the third quarter, fueling XAU/USD's daily rally. 

Gold News

Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shytoshi Kusama, the project lead for Shiba Inu, has dropped a teaser about Shiba Eternity games for the SHIB community. Proponents expect the launch of the collectible card game to be a bullish catalyst for Shiba Inu price. 

Read more

SPDR S&P 500 ETF Trust (SPY) Forecast: We are teetering on the brink

SPDR S&P 500 ETF Trust (SPY) Forecast: We are teetering on the brink

Equity markets remain at the precipice of a technical collapse, which we examine in the weekly long-term chart below. The overall picture remains one of nervousness ahead of the upcoming Q3 earnings season.

Read more

Forex MAJORS

Cryptocurrencies

Signatures