- USD/CAD drifts lower for the fourth straight day and is pressured by a combination of factors.
- The risk-on mood weighs on the USD and acts as a headwind amid a fresh leg up in Oil prices.
- Spot prices find some support ahead of the 100-day SMA as traders look to the US macro data.
The USD/CAD pair remains under some selling pressure for the fourth successive day on Thursday and drops to over a one-month low during the first half of the European session. The pair, however, manages to rebound a few pips in the last hour and is currently placed around mid-1.3500s, down less than 0.10% for the day.
The prevalent risk-on environment - as depicted by an extension of the recent rally in the equity markets - exerts fresh downward pressure on the safe-haven US Dollar (USD) and turns out to be a key factor acting as a headwind for the USD/CAD pair. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company helped calmed market nerves about the contagion risk. Furthermore, no further cracks have emerged in the banking sector over the past two weeks, which suggests that a full-blown banking crisis might have been averted and drives flows away from traditional safe-haven assets, including the Greenback.
Apart from a modest USD weakness, a fresh leg up in Crude Oil prices underpins the commodity-linked Loonie and contributes to the offered tone surrounding the USD/CAD pair. A surprise drop in US Crude stockpiles to a two-year low and concerns about tightening global supplies assist the black liquid to regain positive traction following the overnight pullback from over a two-week high. In fact, the Energy Information Administration reported an unexpected fall in US inventories to a two-year low
during the week of March 24. Moreover, exports from Iraq's northern region remain halted and lend support to Oil prices.
The USD/CAD pair, however, manages to find some support ahead of a technically significant 100-day Simple Moving Average (SMA) as traders keenly await the US inflation data due on Friday. The US Core PCE Price Index - the Fed's preferred inflation gauge - will play a key role in influencing market expectations about future rate hikes. This, in turn, will drive the USD demand and provide a fresh directional impetus to the major.
Technical levels to watch
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 regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.