USD/CAD: More weakness ahead as oil finds ground near $95.00

The USD/CAD pair has slipped below Tuesday’s low at 1.2762 as oil prices found a likely temporary bottom near $95.00 after easing around 36% from March 8 high at $126.51.

The oil prices are stable at around $97.00 despite the presence of multiple downside catalysts. Right from the assurance from the OPEC cartel to pump more oil to fix the imbalance in the demand-supply mechanism to a resurgence of Covid-19 in China, every catalyst is indicating more weakness in the oil prices. China is one of the largest importers of oil and a situation of lockdown in the dragon economy has imposed a threat on the oil demand. The nation has imposed lockdown in Shenzhen and is likely to extend lockdown restrictions to other cities too in case it fails to contain the current epidemic. The restrictions on the movement of men, materials, and machines may diminish the demand for oil in China.

Meanwhile, the US dollar index is settling below 99.00 after tracking subdued US Treasury yields. Investors are anxious over the announcement of the interest rate decision by the Federal Reserve (Fed) on Wednesday. Therefore, a subdued performance has been witnessed in the above-mentioned assets in today’s session. Adding to that, positive global equities have improved the risk appetite of the investors, which is also weighing pressure on the safe-haven assets.

Apart from the Fed’s monetary policy, Canada’s Consumer Price Index (CPI) numbers are also due on Wednesday. A preliminary estimate for yearly Canada’s CPI is 5.5% against the prior print of 5.1%.