- USD/CAD catches fresh bids on Friday and is supported by a combination of factors.
- Weaker crude oil prices undermine the loonie and act as a tailwind amid a bullish USD.
- Traders eye Canadian Retail Sales, US PMIs for some impetus ahead of Fed’s Powell.
The USD/CAD pair attracts fresh buying on the last day of the week and steadily climbs back above the 1.3500 psychological mark during the early European session. Spot prices, however, remain below the highest level since July 2020 touched on Thursday.
Despite worries about a tight global supply, a deteriorating fuel demand outlook continues to weigh on crude oil prices and undermines the commodity-linked loonie. Apart from this, the strong bullish sentiment surrounding the US dollar, bolstered by hawkish Fed expectations, acts as a tailwind for the USD/CAD pair.
It is worth recalling that the US central bank had signalled on Wednesday that it will likely undertake more aggressive rate increases to cap inflation. This remains supportive of the ongoing move up in the US Treasury bond yields, which along with the prevalent risk-off environment, is benefitting the safe-haven greenback.
The market sentiment remains fragile amid worries that rapidly rising borrowing costs will lead to a deeper global economic downturn. Furthermore, concerns that China's zero-covid policy will dent fuel demand exert pressure on oil prices. That said, geopolitical risks seem to lend some support to the black liquid.
Nevertheless, the fundamental backdrop suggests that the path of least resistance for the USD/CAD pair is to the upside. Even from a technical perspective, this week's breakout through a resistance marked by the top end of a multi-month-old ascending channel supports prospects for an extension of the near-term appreciating move.
Market participants now look forward to the release of the Canadian monthly Retail Sales data, which, along with the flash US PMI prints, might provide some impetus to the USD/CAD pair. Traders will further take cues from Fed Chair Jerome Powell's speech, which will drive the USD demand and produce short-term opportunities.
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 clings to strong daily gains near 1.0900
EUR/USD trades at its strongest level since mid-October near 1.0900 after starting the week with a bullish gap. The uncertainty surrounding the US election outcome weighs on the US Dollar and helps the pair continue to push higher.
GBP/USD holds above 1.2950 as USD stays under pressure
GBP/USD stays in positive territory above 1.2950 after failing to clear 1.3000 earlier in the day. Heading into the US presidential election, the 10-year US Treasury bond yield is down more than 2% on the day, weighing on the USD and allowing the pair to hold its ground.
Gold trades around $2,730
Gold price is on the defensive below $2,750 in European trading on Monday, erasing the early gains. The downside, however, appears elusive amid the US presidential election risks and the ongoing Middle East geopolitical tensions.
Three fundamentals for the week: Toss up US election, BoE and Fed promise a roller coaster week Premium
Harris or Trump? The world is anxious to know the result of the November 5 vote – and may have to wait long hours for the outcome. Markets will also respond to the composition of Congress. The Bank of England and the Federal Reserve will enter the fray afterward.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
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.