- USD/CAD drops to over a one-week low and is pressured by a combination of factors.
- Bullish Oil prices underpin the Loonie and weigh on the pair amid a softer Greenback.
- The US PCE Price Index keeps the June Fed rate cut on the table and weighs on the buck.
The USD/CAD pair extends its recent pullback from the 1.3610-1.3615 supply zone, or the YTD peak and remains under some selling pressure for the sixth successive day on Monday. The downfall, however, stalls ahead of the 1.3500 psychological mark, allowing spot prices to recover a few pips from over a one-week low touched during the Asian session.
Crude Oil prices advance to a five-month peak in the wake of concerns about tighter global supply – fuelled by OPEC+ cuts, attacks on Russian refineries and upbeat Chinese manufacturing data. This, in turn, underpins the commodity-linked Loonie, which, along with a modest US Dollar (USD) weakness, is seen exerting some downward pressure on the USD/CAD pair. In fact, OPEC+ pledged to extend production cuts to the end of June.
Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Friday that its Oil companies will focus on reducing output rather than exports in the second quarter. Moreover, Ukrainian drone attacks knocked out several Russian refineries, which is expected to reduce Russia's Oil exports. Furthermore, a pickup in China's manufacturing activity for the first time in six months adds to the optimism about a rise in fuel demand.
The US Dollar (USD), on the other hand, struggles to lure buyers amid expectations that the Federal Reserve (Fed) will begin its rate-cutting cycle in June, bolstered by the lack of any big surprises from the US Personal Consumption Expenditures (PCE) Price Index on Friday. This, along with the prevalent risk-on environment, is seen weighing on the safe-haven buck and contributing to the offered tone surrounding the USD/CAD pair.
Market participants now look forward to the release of the US ISM Manufacturing PMI for some impetus ahead of the Bank of Canada (BoC) Business Outlook Survey. This, along with Oil price dynamics, should contribute to producing short-term trading opportunities around the USD/CAD pair. The focus, however, will remain glued to the closely-watched monthly employment figures from the US and Canada, due on Friday.
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 flirts with daily tops near 1.0730
The continuation of the selling pressure in the Greenback now lends further oxygen to the risk complex, encouraging EUR/USD to revisit the area of daily highs near 1.0730.
USD/JPY looks stable around 156.50 as suspicious intervention lingers
USD/JPY remains well on the defensive in the mid-156.00s albeit off daily lows, as market participants continue to digest the still-unconfirmed FX intervention by the Japanese MoF earlier in the Asian session.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.