USD/CAD rallies to multi-week high, eyes 1.2700 mark ahead of Canadian/US data

USD/CAD gained strong positive traction for the second successive day on Friday.
Weaker oil prices undermined the loonie and acted as a tailwind amid stronger USD.
Investors look forward to Canadian Retail Sales, flash US PMIs for a fresh impetus.

Haresh Menghani FXStreet

The USD/CAD pair added to its intraday gains and shot to its highest level since March 17, around the 1.2680 region during the first half of the European session.

A combination of factors assisted the USD/CAD pair to build on the overnight solid rebound from over a two-week low and gain strong follow-through traction for the second successive day on Friday. A softer tone around crude oil prices undermined the commodity-linked loonie. This, along with broad-based US dollar strength, acted as a tailwind for spot prices.

Investors remain worried about slowing fuel demand in the wake of COVID-19 lockdowns in China - the world's biggest oil importer - and the prospect of weaker global growth. This, to a larger extent, overshadowed concerns about tight global supply and a potential European Union (EU) embargo on Russian gas, which, in turn, prompted fresh selling around crude oil.

On the other hand, the US dollar climbed to its highest level since March 2020 and continued drawing support from expectations for a more aggressive policy tightening by the US central bank. In fact, Fed Chair Jerome Powell all but confirmed a 50 bps rate hike at the upcoming policy meeting on May 3-4 and also hinted at consecutive increases this year.

The markets were quick to react and started pricing in three straight 50 bps rate hikes, which, in turn, pushed the rate-sensitive 5-year US government bond above 3% for the first time since 2018. The selloff in the US fixed income markets continued on Friday. This, along with the risk-off impulse, further boosted demand for the safe-haven greenback.

Market participants now look forward to the Canadian monthly Retail Sales and the flash US PMI prints for a fresh impetus during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD. Traders will further take cues from oil price dynamics for short-term opportunities around the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2666
Today Daily Change	0.0085
Today Daily Change %	0.68
Today daily open	1.2581

Trends
Daily SMA20	1.2552
Daily SMA50	1.2648
Daily SMA100	1.2678
Daily SMA200	1.2628

Levels
Previous Daily High	1.259
Previous Daily Low	1.2458
Previous Weekly High	1.2676
Previous Weekly Low	1.2521
Previous Monthly High	1.2901
Previous Monthly Low	1.243
Daily Fibonacci 38.2%	1.254
Daily Fibonacci 61.8%	1.2509
Daily Pivot Point S1	1.2496
Daily Pivot Point S2	1.2412
Daily Pivot Point S3	1.2365
Daily Pivot Point R1	1.2628
Daily Pivot Point R2	1.2675
Daily Pivot Point R3	1.276

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.