USD/CAD shoots to near 1.2930 as DXY recovers firmly, oil weakens
- USD/CAD has established above 1.2900 firmly as oil prices fall and DXY rebounds.
- The odds of the maintenance of the status quo by the Fed in July have advanced significantly.
- Oil prices have reported their first monthly losses in CY22 on escalating recession fears.
The USD/CAD pair has surged strongly above the critical hurdle of 1.2920 as the US dollar index (DXY) has extended its recovery after overstepping 104.86 in the Asian session. The loonie bulls are sensing extreme selling pressure on souring market mood and falling oil prices.
The DXY is attempting to reverse its entire losses recorded on Thursday on expectations of a bumper rate hike by the Federal Reserve (Fed). The Fed is expected to maintain its status-quo and will announce a rate hike by 75 basis points (bps) in its July monetary policy meeting.
What is worst for the risk-perceived currencies now are the expectations of a higher interest rate environment for a prolonged period? The troublesome job for Fed chair Jerome Powell in times when the inflation rate has comfortably established above 8% is that higher interest rates have failed to make a significant impact on price pressures till now. No doubt, the DXY will remain on the seventh cloud for now and the risk-sensitive assets will remain on the tenterhooks.
Meanwhile, the oil prices are looking to extend their losses if it violates the critical support of $105.00. The escalating recession fears have shifted the oil prices into the grip of bears. Also, the oil prices have reported their first monthly losses in CY22.
On the loonie front, Canadian markets are closed on Friday on account of the Canada Day bank holiday. Next week, Canada’s employment numbers will be of key importance. The Unemployment Rate may increase to 5.2% from the prior print of 5.1%.
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.
