- USDCAD is on the brink of a move higher as the US Dollar firms.
- WTI pressured on Covid cases in China, denting CAD.
USDCAD is making tracks on the upside on Monday, partly as oil prices fall and the greenback rallies against a basket of major currencies. The US Dollar is accumulating as investors kept their focus on the Federal Reserve's interest rate hiking path. Ahead of the open, a Fed member poured cold water over the US consumer Price Index upside surprise, arguing it was too soon to call for a pivot.
At the time of writing, USDCAD is trading at 1.3286, up 0.27% on the day having traded between a low of 1.3239 and 1.3309 so far. The US Dollar index, DXY, is up some 0.2% having climbed from a low of 106.41 and reached a high of 107.27 so far, supported by comments from Federal Reserve Governor Christopher Waller. He crossed the wires and said Friday's inflation report was "just one data point," and that markets are "way out in front".
Key comments
- Will need to see a run of CPI reports to take a foot off the brake.
- Positive that goods prices came down with some moderation in services, but it needs to continue.
- US policy rate is "not that high" given level of inflation.
- Rate hikes so far has not "broken anything.
- The US housing market needed to slow down.
- Signal was to pay attention to the endpoint not the pace of rate increases, and until inflation slows the endpoint is "a ways out".
Meanwhile, both US and Canadian government bond yields have been mixed following the Remembrance and Veterans Day holidays on Friday. In this regard, we will have the Canadian inflation data for October, due on Wednesday. This could offer clues on the Bank of Canada's policy outlook. Money markets expect the central bank to raise interest rates by at least 25 basis points at its Dec. 7 policy announcement.
Elsewhere, the price of oil has been falling since the start of the day. The reports of surging new Covid-19 infections in China, even after the country relaxed some of its quarantine policies last week, have dented the market's stability. West Texas Intermediate crude is down some 3.3% falling from a high of $89.82 to a low of $85.68. The drop came, as Reuters reports, following the news agency's report that ''new Covid-19 infections were surging in Beijing and other cities even as the country, the world's No.1 oil importer last week relaxed some of the Zero-Covid policies that shut-down major cities for weeks at a time, cutting in demand, while the new policies are seen as supportive for the country's economy.''
USDCAD weekly chart
The M-Formation is a compelling bullish feature, but there could still be some downside to come.
A break of the support opens up the way to dynamic trendline support.
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
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.