USD/CAD spikes to fresh daily top, upside potential seems limited amid bullish Oil prices

USD/CAD attracts some buyers near the 1.3630 region on Tuesday amid a modest USD rebound.
A fresh leg up in the US bond yields turns out to be a key factor lending support to the Greenback.
Bullish Crude Oil prices could underpin the Loonie and keep a lid on any further gains for the pair.

Haresh Menghani FXStreet

The USD/CAD pair rebounds nearly 50 pips from the 1.3630 region on Tuesday and touches a fresh daily peak during the first half of the European session. The pair is currently placed around the 1.3675-1.3580 area and for now, seems to have stalled last week's pullback from levels just above the 1.3800 round-figure mark.

The intraday uptick could be attributed to a modest US Dollar (USD) bounce from a two-day low, supported by a fresh leg up in the US Treasury bond yields. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company from the Federal Deposit Insurance Corporation (FDIC) eases fears of a full-blown banking crisis. Adding to this, regulators reassured that they stand ready to address any liquidity shortfalls and push the US bond yields higher. That said, the Federal Reserve's signal last week that it might soon pause the rate-hiking cycle in the wake of the recent turmoil in the banking sector could cap the USD.

It is worth recalling that the US central bank raised interest rates by 25 bps on Wednesday, as was widely anticipated, though sounded cautious about the outlook. Furthermore, a generally positive risk tone around the equity markets might also contribute to keeping a lid on any meaningful gains for the safe-haven Greenback. Apart from this, a further positive move up in Crude Oil prices, to a two-week peak, could underpin the commodity-linked and act as a headwind for the USD/CAD pair. This, in turn, warrants some caution before placing aggressive bullish bets around the major and positioning for any further intraday strength.

Market participants now look to the US economic docket, featuring the release of the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index. Apart from this, the US bond yields and the broader risk sentiment will drive the USD demand. This, along with Oil price dynamics, could produce short-term trading opportunities around the USD/CAD pair. The market focus will then shift to the release of the final US Q4 GDP print on Thursday, which will be followed by the monthly Canadian GDP and the Fed's preferred inflation gauge - the Core PCE Price Index - on Friday.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3681
Today Daily Change	0.0020
Today Daily Change %	0.15
Today daily open	1.3661

Trends
Daily SMA20	1.3706
Daily SMA50	1.3534
Daily SMA100	1.3515
Daily SMA200	1.3363

Levels
Previous Daily High	1.3745
Previous Daily Low	1.365
Previous Weekly High	1.3804
Previous Weekly Low	1.3631
Previous Monthly High	1.3666
Previous Monthly Low	1.3262
Daily Fibonacci 38.2%	1.3686
Daily Fibonacci 61.8%	1.3709
Daily Pivot Point S1	1.3625
Daily Pivot Point S2	1.359
Daily Pivot Point S3	1.3529
Daily Pivot Point R1	1.3721
Daily Pivot Point R2	1.3781
Daily Pivot Point R3	1.3817

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold bounces but not out of the woods yet

Gold is facing fresh sellers above $4,300 early Thursday, stalling its recovery from six-week lows of $4,235 reached soon after hawkish US Federal Reserve monetary policy announcements.

XRP and XLM rebound amid mixed signals

Ripple (XRP) and Stellar (XLM) extend their recovery at the time of writing on Thursday after finding support at key technical levels. However, mixed derivatives and on-chain data for both altcoins suggest that traders remain cautious and have yet to show strong conviction in a sustained rebound. Derivatives data shows a mixed and cautious outlook among traders.

The Fed rate hike: What happens now?

The dust has settled on tonight’s Fed meeting and the market reaction is clear: the Fed’s signal that there could be a series of rate hikes has spooked financial markets. Bonds sold off at the short end of the Treasury curve and US stocks also fell, led by the Dow Jones Industrial Average, which slipped more than 1% on Wednesday night.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.