- USD/CAD has scaled above 1.2800 as investors expect a hawkish tone from Fed’s Powell.
- The market participants are expecting a downbeat performance from the US PMI economic data.
- Weaker PMIs from around the world have dented oil demand.
The USD/CAD pair is advancing sharply higher after hitting a low of 1.2764 in early Tokyo. The pair has climbed above 1.2800 and has touched an intraday high of 1.2810. A rebound in the asset is backed by a modest recovery in the US dollar index (DXY) after a bloody Monday and a plunge in the oil prices.
The DXY is recovering gradually from monthly lows of 102.07 as short-coverings hit the counter. The market participants are awaiting the speech from Federal Reserve (Fed) chair Jerome Powell and the expectation of hawkish guidance for June monetary policy is forcing investors to liquidate their shorts in the DXY. As per the market consensus, an interest rate elevation by 50 basis points (bps) is expected from the Fed next month.
Apart from that, the IHS Markit will release the monthly S&P Purchase Managers Index (PMI) numbers in the New York session. The Composite PMI is seen at 55.5 against the prior release of 56. The Manufacturing PMI may slip to 57.9 from the previous figure of 59.2 while the Services PMI will release at 55.4 vs. 55.6 recorded earlier.
On the oil front, lower PMI numbers from the major economies are indicating weak consumption of oil. This has brought some significant offers in the oil prices and a downside move has been witnessed below $110.00. Lower oil prices are hurting the Canadian dollar as it will reduce its fund flows from oil exports to the US.
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
AUD/USD keeps the red below 0.6400 as Middle East war fears mount
AUD/USD is keeping heavy losses below 0.6400, as risk-aversion persists following the news that Israel retaliated with missile strikes on a site in Iran. Fears of the Israel-Iran strife translating into a wider regional conflict are weighing on the higher-yielding Aussie Dollar.
USD/JPY recovers above 154.00 despite Israel-Iran escalation
USD/JPY is recovering ground above 154.00 after falling hard on confirmation of reports of an Israeli missile strike on Iran, implying that an open conflict is underway and could only spread into a wider Middle East war. Safe-haven Japanese Yen jumped, helped by BoJ Governor Ueda's comments.
Gold price pares gains below $2,400, geopolitical risks lend support
Gold price is paring gains to trade back below $2,400 early Friday, Iran's downplaying of Israel's attack has paused the Gold price rally but the upside remains supported amid mounting fears over a potential wider Middle East regional conflict.
WTI surges to $85.00 amid Israel-Iran tensions
Western Texas Intermediate, the US crude oil benchmark, is trading around $85.00 on Friday. The black gold gains traction on the day amid the escalating tension between Israel and Iran after a US official confirmed that Israeli missiles had hit a site in Iran.
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu, WIF token’s show of strength was not just influenced by Bitcoin price reclaiming above $63,000.