- USD/CAD struggles to capitalize on the overnight bounce and edges lower on Wednesday.
- An uptick in crude oil prices underpins the Loonie and caps the upside amid a softer USD.
- Traders seem reluctant and prefer to wait for the release of the US CPI report on Thursday.
The USD/CAD pair attracts some sellers in the vicinity of mid-1.3400s on Wednesday and erodes a part of the previous day's recovery gains. Spot prices remain on the defensive through the first half of the European session, though manage to hold above the 1.3400 round-figure mark.
A modest uptick in crude oil prices underpins the commodity-linked Loonie and is seen as a key factor acting as a headwind for the USD/CAD pair. China's biggest pivot away from its strict zero-COVID policy raises hopes for a sharp recovery in fuel demand and acts as a tailwind for the black liquid. That said, worries about a deeper global economic downturn might keep a lid on any meaningful gains for oil prices.
The US Dollar, on the other hand, is weighed down by a fresh leg down in the US Treasury bond yields amid growing acceptance that the Fed will soften its policy stance. Data released from the US last week indicated that the effect of the Fed's large rate hikes in 2022 is being felt in the economy. This, in turn, lifts bets for smaller Fed rate hikes going forward and keeps the US bond yields depressed near a multi-week low.
Apart from this, a generally positive tone around the equity markets is seen denting the greenback's relative safe-haven status. Traders, however, seem reluctant to place aggressive bets around the USD/CAD pair and prefer to wait on the sidelines ahead of the US consumer inflation figures, due for release on Thursday. In the meantime, the US bond yields could drive the USD demand
Apart from this, oil price dynamics will provide some impetus to the USD/CAD pair and assist traders to grab short-term opportunities. The fundamental backdrop, meanwhile, seems tilted firmly in favour of bearish traders, suggesting that any meaningful positive move is more likely to get sold into and remain capped, at least for now.
Technical levels to watch
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 retreats toward 1.0850 ahead of NFP
EUR/USD corrects lower toward 1.0850 after posting gains for four consecutive days. Investors stay on the sidelines while waiting for the US October employment report, which will highlight Nonfarm Payrolls and Unemployment Rate figures.
GBP/USD stabilizes near 1.2900, eyes on US employment report
GBP/USD holds steady at around 1.2900 in the European session after closing deep in the red on Thursday, as the risk-averse market atmosphere didn't allow the pair to gain traction despite persistent USD weakness. Investors await US NFP data.
Gold recovers above $2,750 as traders brace for US NFP data
Gold recovers some lost ground and trades above $2,750 on Friday. The uncertainties surrounding the US presidential election and the ongoing geopolitical tensions in the Middle East provide some support to the precious metal as focus shifts to key US data.
US Nonfarm Payrolls Forecast: NFP October report set to show slower job growth
US Nonfarm Payrolls are expected to rise by 113K in October after September’s stellar gain of 254K. The United States Bureau of Labor Statistics will release the labor data on Friday at 12:30 GMT. The US Dollar’s fate and the Fed’s future interest rate cuts hinge on the US jobs data.
Bank of Japan holds rates steady amid signs of modest GDP growth
Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.