USD/CAD traces US Dollar rebound to aim for 1.3400 on downbeat Oil price, Canadian employment eyed
- USD/CAD retreats from intraday high as it snaps three-day losing streak.
- US Dollar consolidates the biggest daily loss in five weeks, Oil grinds lower despite price-positive headlines from Middle East.
- Market’s reassessment of previous risk-on mood, Fed concerns propels Loonie pair.
- BoC’s Beaudry defends latest rate hike but also says, “nothing is determined looking forward”.
USD/CAD takes offers to 1.3360 while reversing from the intraday high as it prepares for Canada employment data for May on early Friday. In doing so, the Loonie pair fails to justify a halt in the US Dollar’s fall, as well as the mixed performance of the Oil price, amid dicey market hours.
US Dollar Index (DXY) clings to mild gains around 103.35 after falling the most in five weeks the previous day. In doing so, the greenback’s gauge versus six major currencies benefits from the market’s reassessment of Fed bets after ruling out the hawkish bias the previous day.
That said, Thursday’s downbeat US Initial Jobless Claims, the highest since October 2021, pushed back the Fed hawks and drowned the US Dollar. Even so, the International Monetary Fund (IMF) urged the US Federal Reserve and other global central banks to "stay the course" on monetary policy and remain vigilant in combating inflation, per Reuters.
On the other hand, WTI crude oil remains pressured near $71.00 after previously cheering the downbeat US Dollar, as well as the headlines surrounding Saudi Arabia’s threat to thwart the US-Saudi ties. That said, the global recession fears, backed by higher rates and downbeat statistics at the major economies keep the black gold on the back foot.
Late on Thursday, Bank of Canada (BoC) Deputy Governor Paul Beaudry initially defended the Canadian central bank’s surprise rate hike by saying, “It is more likely that long-term rates will remain elevated than the opposite.” The policymaker, however, also said tried to be modest while saying that they are taking one rate decision at a time.
Looking ahead, USD/CAD remains depressed due to the latest divergence in the monetary policy bias surrounding the BoC and the Fed. However, today’s Canada jobs report may allow the bears to take a breather in case of disappointing markets and prepare for the next week’s Fed monetary policy meeting.
Technical analysis
USD/CAD’s latest rebound could also be linked to the nearly oversold conditions of the RSI (14) line. Hence, the Loonie pair stays on the seller’s radar unless crossing a convergence of the 100-DMA and 200-DMA, around 1.3515 by the press time. Though, the 1.3400 round figure and the weekly high of near 1.3460 can lure short-term buyers.
Also read: USD/CAD Price Analysis: Bounces off 1.3330 key support ahead of Canada Employment data
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
