USD/CAD rebounds as USD Index refreshes nine-month high amid risk-on mood
- USD/CAD discovers buying interest near 1.3460, supported by a fresh upside in the US Dollar.
- S&P500 opens on a flat-to-negative note as investors remain worried about economic prospects.
- Fed Collins said on Friday that a further rate hike is certainly not off the table.
The USD/CAD pair finds buying interest near 1.3460 amid sheer strength in the US Dollar. The Loonie asset aims to recapture the psychological resistance of 1.3500 as the market mood dampens amid deepening fears of a global slowdown.
S&P500 opens on a flat-to-negative note as investors remain worried about economic prospects. The Federal Reserve (Fed) is expected to keep interest rates higher for a longer period as inflationary pressures in excess of the desired rate of 2% would be a hard nut to crack.
The US Dollar Index (DXY) prints a fresh nine-month high near 105.90 as the US economy is absorbing the consequences of higher interest rates by the Fed comfortably. Slowing inflation and a resilient labor market allowed the Fed to keep interest rates unchanged last week. Also, hawkish guidance from Boston Fed President Susan Collins strengthened the US Dollar.
Fed Collins said on Friday that a further rate hike is certainly not off the table. She further added that inflation can fall with only a modest rise in unemployment and that core services excluding shelter have not yet shown a sustained improvement.
Meanwhile, the oil price remains sideways around $90.00 as global central bankers are pausing the rate-tightening spell sooner to avoid risks of economic slowdown. It is worth noting that Canada is the leading exporter of oil to the United States and maintains a positive relationship with the Canadian Dollar.
Last week, the Canadian Dollar remained in action after a mixed Retail Sales report for July. Consumer spending expanded at a slower pace of 0.3% vs. expectations of 0.4%. In June, Retail Sales expanded nominally by 0.1%. Retail Sales excluding automobiles expanded strongly by a full one percent, doubling expectations of 0.5%. The economic data was contracted by 0.7% in June. Scrutiny of the Retail Sales report shows that demand for automobiles remained weak. Households postponed demand for automobiles to avoid higher interest obligations.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
