- USD/CAD rebounds from a two-week low and draws support from a combination of factors.
- Weaker Oil prices undermine the Loonie and act as a tailwind amid renewed USD buying.
- Traders look forward to important US macro releases before placing fresh directional bets.
The USD/CAD pair attracts some buyers in the vicinity of mid-1.3600s, or a two-week low touched earlier this Wednesday and for now, seems to have snapped a five-day losing streak. Spot prices stick to modest intraday gains through the first half of the European session and currently trade near the 1.3675-1.3680 region or the top end of the daily range.
Crude Oil prices struggle to capitalize on the previous day's goodish rebound from the 50-day Simple Moving Average (SMA) support amid easing geopolitical tensions and concerns about slowing economic growth in China. This, along with expectations that the Bank of Canada (BoC) will cut interest rates in the summer amid declining inflation and slower economic growth, is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair amid the emergence of some US Dollar (USD) dip-buying.
Investors now seem convinced that the Federal Reserve (Fed) is unlikely to begin cutting interest rates before September and have also scaled back their expectations about the number of rate cuts in 2024 to two amid still sticky inflation. The hawkish outlook, meanwhile, remains supportive of elevated US Treasury bond yields and helps revive the USD demand. That said, a generally positive risk tone might hold back traders from placing fresh bullish bets around the safe-haven buck and act as a headwind for the USD/CAD pair.
Investors might also prefer to wait on the sidelines ahead of this week's important US macro data, starting with Durable Goods Orders later during the North American session. Apart from this, the Advance US Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index on Thursday and Friday, respectively, might provide fresh cues about the Fed's rate cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the USD/CAD pair.
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.