- USD/CAD renews intraday high to consolidate the biggest daily loss in three weeks.
- Geopolitical fears, US dollar retreat enabled oil’s rebound from multi-day low.
- Sluggish session, light calendar allows traders to pare recent moves.
- US CPI for July is the key, second-tier data, risk catalysts may entertain intraday traders.
USD/CAD licks its wounds as it renews daily tops near 1.2870 while paring the biggest loss since July 19 during Tuesday’s Asian session.
The loonie pair dropped the most in three weeks the previous as a recovery in prices of Canada’s main export, WTI crude oil, joined a pullback in the US dollar. Also exerting downside pressure on the USD/CAD prices was the cautious optimism in the markets ahead of the US Consumer Price Index (CPI) for July, up for publishing on Wednesday.
That said, the WTI crude oil rose by near 2.0% to $89.70 the previous day, around $90.20 by the press time. The black gold prices might have cheered firmer China trade numbers and cautious optimism in the markets to recover while ignoring hopes of more output from Iran.
On the other hand, US Dollar Index (DXY) traced Treasury yields to consolidate Friday’s heavy gains that offered the greenback gauge the first weekly positive in three. That said, the DXY registered a 0.19% daily loss to 106.37 by the end of Monday whereas the US 10-year Treasury yields dropped nearly seven basis points (bps) to 2.75% at the latest, following a 14-bps run-up the previous day.
It’s worth noting that the market’s previous risk-on mood appears to have faded of late as US President Joe Biden raised concerns over China’s actions near the Taiwan border. On the same line were fears of the Fed’s aggression and economic slowdown. Considering Friday’s strong US jobs report, versus mixed employment data from Canada, the Fed funds futures price in a 69% chance of another 75 bps rate hike in September, per Reuters.
While portraying the mood, S&P 500 Future trim early Asian session gains around 4,145 by the press time.
Moving on, the US Nonfarm Productivity and Unit Labor Costs for the second quarter (Q2) could entertain USD/JPY traders. Forecasts suggest that the US Nonfarm Productivity could improve to -4.6% from -7.3% prior while Unit Labor Costs may ease to 9.5% versus 12.6% previous readings.
Also read: US CPI Preview: It is the hard core that counts, five scenarios for critical inflation data
Technical analysis
An impending bull cross on the MACD joins steady RSI (14) to support the USD/CAD buyers unless the quote breaks an upward sloping trend line from early June, close to 1.2835. That said, recovery remains limited as the five-week-old horizontal area near 1.2930-35 challenges the upside momentum.
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.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.