USD/CAD steadies above 1.3100 ahead of US Michigan CSI, oil rebounds firmly

The USD/CAD pair is oscillating in a narrow range of 1.3090-1.3140 from the New York session after displaying a corrective action. The major attracted significant offers after failing to hold the fresh yearly highs above 1.3200. The asset has followed the footprints of the US dollar index (DXY) and has turned sideways ahead of the US Michigan Consumer Sentiment Index (CSI).

As per the market consensus, the US Michigan CSI is expected to slip minutely to 49.9 from the prior release of 50. It is worth noting that the prior release of 50 was the lowest in the past 15 years and even an expectation of a minute slippage this time may bolster the statements of critics.

The economic data resembles the confidence of the consumers in the financial prospects of the country. A slippage in the economic data dictates a drop in the buying conditions for real estate and durable goods in the economy. No doubt, the persistent price rise has trimmed the demand for durable goods and higher interest rates are becoming a nightmare for home buyers. Also, the announcement of a rate hike by 1% from the Federal Reserve (Fed) will bring a serious slump in the demand for real estate.

On the loonie front, investors are still in the hangover of the 1% rate hike announcement by the Bank of Canada. Energy bills and food products are driving the inflation rate higher vigorously, which forced the BOC to announce the unusual and has set an example for other central bankers that a sky-rocketing rate hike can be announced.

Meanwhile, the oil prices have rebounded strongly as a responsive buying action pushed the black gold higher after slipping below the critical support of $90.00. This indicates that the extremely oversold signals have supported the oil prices, however, the downside is still warranted.