- USD/CAD fades bounce off two-week low as markets consolidate recent moves.
- Risk-aversion underpins US dollar strength, downbeat oil prices.
- Canada CPI failed to impress bears as inflation fears propel flight to safety, softer US data was ignored as well.
- Fedspeak, second-tier US statistics may entertain momentum traders, risk catalysts are crucial too.
USD/CAD meets sellers around 1.2900, fading the previous day’s recovery moves from a fortnight low, as traders take a breather from the latest risk-aversion amid a sluggish start to the Asian session. That said, the Loonie pair takes offers to renew intraday low around 1.2875 by the press time.
Fears of a slowdown in the US GDP growth and the Fedspeak favoring ‘only’ 50 basis points (bps) of rate hikes for the next two meetings seem to have underpinned the latest consolidation in the market moves. A lack of major catalysts could also be linked to the recent moves, especially after the rout in risk assets the previous day.
That said, the Wall Street benchmarks saw the red while the US 10-year Treasury yields dropped 11 basis points (bps) to 2.88% by the end of Wednesday’s North American trading session.
Higher inflation numbers from the UK, Eurozone and Canada stoked fears of slowing growth and propelled risk-aversion on Wednesday. That said, Canada’s Consumer Price Index (CPI) couldn’t reject the USD/CAD bulls despite printing better-than-expected figures of 6.8% YoY for April.
Not only the sour sentiment fuelled the US dollar but also weighed on prices of WTI crude oil, Canada’s key exports, offering a double whammy of attacks on the Canadian Dollar (CAD). Also contributing to the oil price weakness are fears of demand slowdown, especially emanating from China due to the covid spread and fresh lockdown in Tianjin, the port city near Beijing.
That being said, USD/CAD traders may now keep their eyes on the risk catalysts for fresh impetus ahead of the second-tier data relating to housing and manufacturing from the US and Canada. Above all, clues over the firming of inflation fears will be crucial to watch.
Technical analysis
Failure to provide a daily closing beyond the 10-day EMA, around 1.2890 at the latest, joins the pair’s sustained trading below the previous support line from April 21, close to 1.2965, to keep USD/CAD bears hopeful of meeting the monthly low near 1.2715.
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 holds gains near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.