- USD/CAD witnessed some selling on Monday and snapped two successive days of the winning streak.
- A blowout rally in crude oil prices underpinned the loonie and exerted downward pressure on the pair.
- The risk-off mood amid the Russia-Ukraine war benefitted the safe-haven USD and extended support.
The USD/CAD pair slipped below the 1.2700 mark during the early European session, albeit has managed to rebound a few pips from the daily low touched in the last hour.
Following an early uptick to the 1.2755 area, the USD/CAD pair met with a fresh supply on Monday and extended the previous session's late pullback from the vicinity of the 1.2800 round-figure mark. A blowout rally in crude oil prices underpinned the commodity-linked loonie, which, in turn, was seen as a key factor that acted as a headwind for the major.
The markets continued reacting to the worsening situation in Ukraine and increasing Western sanctions on Russia. This, along with a potential ban on Russian crude supplies and delays in Iranian talks, pushed crude oil prices to the highest level since 2008. Apart from this, the closure of Libya's El Feel and Sharara oilfields further boosted the black liquid.
On the other hand, the prevalent risk-off environment continued driving flows towards traditional safe-haven assets and lifted the US dollar to levels not seen since May 2020. The market sentiment remained jittery as Russian forces intensified attacks on Ukraine. Moreover, Russian President Vladimir Putin warned that the war in Ukraine would continue.
Apart from this, Friday's mostly upbeat US monthly employment details further acted as a tailwind for the greenback. This, in turn, assisted the USD/CAD pair to find some support at lower levels, though the attempted recovery lacked any bullish conviction. Nevertheless, the downtick suggests that last week's goodish rebound from sub-1.2600 levels has run out of steam.
In the absence of any major market-moving economic releases, either from the US or Canada, the mixed fundamental backdrop warrants some caution before placing aggressive directional bets. Hence, it will be prudent to wait for some follow-through selling before traders start positioning for any further intraday depreciating move for the USD/CAD pair.
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.