USD/CAD to stay way above 1.3400 despite recovery attempt by USD Index


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  • USD/CAD is aiming to shift its auction above 1.3400 as the BoC has reached the terminal rate for now.
  • The rising probability of a smaller interest rate hike by the Fed is weighing on US yields.
  • Oil price is losing foot above $80.50 as oil demand sees short-term pain due to China’s Lunar New Year holidays.

The USD/CAD pair has corrected marginally after a recovery move from 1.3380 in the Asian session. The Loonie asset is looking to shift its business above 1.3400 despite a recovery attempt from the US Dollar Index (DXY). The recovery attempt in the USD Index seems less confident amid the risk-on market mood.

S&P500 futures are showing marginal gains in early Asia after settling almost flat on Wednesday. The 500-stock basket has turned volatile as corporate are demonstrating their quarterly performance through earnings displays. The USD Index is putting efforts in building a cushion around a seven-month low at 101.10 ahead of the United States Gross Domestic Product (GDP) (Q4) and other economic data, which will release on Thursday.

The rising probability of a smaller interest rate hike by the Federal Reserve (Fed) for its February meeting is weighing on the US Treasury yields. The alpha generated by the 10-year US Treasury bonds has dropped to 3.44%.

The street is expecting a contraction in the scale of economic activities in the fourth quarter to 2.6% from the former release of 3.2% as Fed chair Jerome Powell has burnt their hands by triggering recession fears in his fight against stubborn inflation. The release of the Durable Goods Orders (Dec) will provide cues about the forward demand, which is expected to jump to 2.5% vs. the prior release of -2.1%.

Meanwhile, the Canadian Dollar is expected to face the heat as Bank of Canada (BoC) Governor Tiff Macklem has paused further policy tightening after pushing the interest rates by 25 basis points (bps) to 4.5%. The BoC will keep interest rates steady at 4.5% for the rest of the year and will assess the impact of yet terminal rate ahead.

On the oil front, oil price is struggling to sustain above 80.50 as celebrations in China due to the Lunar New Year festival has resulted in a pause in economic activities and henceforth a short-term pain in the oil demand. It is worth noting that Canada is a leading exporter of oil to the United States and lower oil prices might impact the Canadian Dollar.

USD/CAD

Overview
Today last price 1.3402
Today Daily Change 0.0017
Today Daily Change % 0.13
Today daily open 1.3385
 
Trends
Daily SMA20 1.3455
Daily SMA50 1.3504
Daily SMA100 1.352
Daily SMA200 1.3202
 
Levels
Previous Daily High 1.3428
Previous Daily Low 1.334
Previous Weekly High 1.3521
Previous Weekly Low 1.3351
Previous Monthly High 1.3705
Previous Monthly Low 1.3385
Daily Fibonacci 38.2% 1.3394
Daily Fibonacci 61.8% 1.3374
Daily Pivot Point S1 1.3341
Daily Pivot Point S2 1.3296
Daily Pivot Point S3 1.3253
Daily Pivot Point R1 1.3429
Daily Pivot Point R2 1.3472
Daily Pivot Point R3 1.3517

 

 

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