USD/CAD licks BoC-inflicted losses below 1.3400 amid softer Oil price, downbeat US Dollar
|- USD/CAD remains pressured for the third consecutive day at the lowest level in a month.
- BoC traces RBA’s moves to surprise market with 0.25% rate hike to tame inflation woes.
- WTI crude oil remains depressed on demand-supply fears, ignores US Dollar’s two-day losing streak.
- Speech from BoC’s Beaudry, Canada employment data eyed ahead of next week’s FOMC.
USD/CAD fades bounce off intraday low as it drops to 1.3360 heading into Thursday’s European session, after refreshing the monthly bottom at 1.3320 the previous day. In doing so, the Loonie pair cheers the US Dollar weakness while paying little heed to the mildly offered WTI crude oil price, which is Canada’s main export earner.
On Wednesday, the Bank of Canada (BoC) surprised markets by announcing 25 basis points (bps) increase to increase the benchmark interest rate, to 4.75%, versus market expectations supporting no change in the previous rate of 4.50%. In its policy statement, the BoC said that concerns have increased that Consumer Price Index (CPI) inflation could get stuck materially above the 2% target. That said, the BoC statement appeared dovish as it removed the April language about how the Canadian central bank is prepared to raise rates further if needed.
Elsewhere, WTI crude oil prints mild losses near $72.50 while failing to extend the previous day’s corrective bounce, eyes the second consecutive weekly loss. In doing so, black gold bears the burden of the market’s fears of slower economic growth due to hawkish central bank actions.
It should be noted, however, that the US Dollar Index (DXY) remains pressured despite jittery markets amid the latest increase in the bets on the Federal Reserve’s 25 bps rate hike in July, even as the June Federal Open Market Committee (FOMC) is likely to keep the rates unchanged.
Against this backdrop, S&P500 Futures extend Wednesday’s losses to 4,265, down 0.25% intraday, whereas the US 10-year Treasury bond yields grind near 3.79% after rising the most in five weeks the previous day.
Looking ahead, comments from Bank of Canada (BoC) Deputy Governor Paul Beaudry and Canada’s monthly jobs report will be the key to watching for clear directions ahead of next week’s Fed meeting.
Technical analysis
Despite the latest weakness, the USD/CAD pair is yet to smash a seven-month-old ascending support line, around 1.3330 at the latest, which in turn joins the nearly oversold RSI (14) line to suggest a corrective bounce in price.
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.