- USD/CAD picks up bids to pare intraday losses during two-day losing streak.
- Oil price fades the previous day’s bounce off the lowest levels since December 2021.
- Market sentiment dwindles amid light calendar, pre-Fed concerns and lack of confidence in global banking system.
- US, Canada Industrial Production, US consumer-centric data to entertain Loonie traders ahead of next week’s FOMC.
USD/CAD consolidates weekly losses as it reverses from the intraday low of 1.3683 to 1.3710 during early Friday morning in Europe. The Loonie pair’s latest rebound could be linked to the WTI crude oil’s pullback, Canada’s key export earner. In doing so, the quote struggles to justify the US Dollar’s second consecutive daily loss amid sluggish trading on the last day of the volatile week.
WTI crude oil fades bounce off multi-month low to drop back below $69.00 as the Asian session risk-on mood eases ahead of the European traders’ arrivals. The reason could be linked to the mixed headlines suggesting the market’s fears of the global banking system.
Among the key headline is Reuters’ analysis suggesting the British firms’ withdrawal of funds after the latest banking chaos surrounding the Silicon Valley Bank and Credit Suisse. On the same line is the hedge funds’ rush towards securing positions via the traditional safe-haven Yen as Bloomberg said, “Hedge funds held the biggest yen-bearish positions in six months last week, a painful trade as the collapse of Silicon Valley Bank suddenly boosted demand for Japan’s currency as a haven.”
Furthermore, receding hawkish calls for the European central bank’s next move and the doubts over the Fed’s rate hikes past the next week’s 0.25% lift also weigh on the sentiment and allow the US Dollar to remain firmer.
Alternatively, the mildly positive sentiment could be linked to the global policymakers’ and bankers’ efforts to avoid the return of 2008’s financial crisis, as well as comments from rating agencies suggesting no more challenges for the baking sector.
Against this backdrop, the S&P 500 Futures reverses the early day gains around 3,990, following an upbeat close of the Wall Street benchmarks, whereas the US Treasury bond yields fade the previous day’s corrective bounce off the monthly low.
Moving on, the US and Canadian Industrial Production for February could entertain the USD/CAD pair traders ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. Also important to watch will be the US Michigan Consumer Sentiment Index for March and the UoM 5-year Consumer Inflation Expectations for the said month.
Technical analysis
A two-week-old symmetrical triangle restricts immediate USD/CAD moves between 1.3685 and 1.3785.
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