USD/CAD struggles to cheer downbeat US Dollar above 1.3500 as Oil Price falls

USD/CAD renews its intraday low near 1.3540 while skating on thin ice during early Tuesday, struggling to defend the week-start pullback from the highest level since June 01. In doing so, the Loonie pair also hesitates in cheering the US Dollar’s retreat amid downbeat prices of Canada’s main export earner, namely WTI Crude Oil.

US Dollar Index (DXY) renews its intraday low near 103.20, down for the second consecutive day, as market players brace for Friday’s speech for Fed Chair Jerome Powell at the Kansas Fed’s annual event called at the Jackson Hole Symposium. On the other hand, the WTI crude oil also prints a two-day losing streak while declining to $80.00 at the latest.

It’s worth noting that the market’s indecision about the Fed’s future moves, especially after the last weekly impressive US data, also allows the Greenback to prepare for the key event.

In doing so, the greenback’s gauge versus the six major currencies ignores sturdy US Treasury bond yields and the talks of higher future wage growth in the US. That said, the 10-year US Treasury bond yields refreshed the highest level since November 2007 earlier in the day to 4.36% before easing to 4.34% at the latest.

It should be noted that the Federal Reserve Bank of New York unveiled its SCE Labor Market Survey results late Monday that suggested record wage expectations and could have contributed to the latest risk-off mood, as well as firmer bond yields. “The Lowest wage respondents would be willing to accept for a new job jumped to a record high of $78,645 in July, up from $72.873 a year ago,” said the findings.

Apart from the fears of higher wages, China’s efforts to defend the post-COVID economic recovery, via a slew of stimulus measures, fail to impress market optimists and exert downside pressure sentiment, which should have weighed on the Oil Price and prod the DXY bears. On the same line is Bloomberg’s news saying that the S&P Global Ratings downgrades several US banks while highlighting the negative impacts of the higher rates and a decline in deposits. It’s worth noting that Moody’s initiated such moves early in August and triggered the risk-off mood.

While portraying the mood, S&P500 Futures register the first daily loss in three while fading the previous two-day rebound from a nine-week low, down 0.15% intraday to 4,405 by the press time.

Amid these plays, the USD/CAD is likely to witness lackluster moves but US Existing Home Sales for July and Richmond Fed Manufacturing Index for August will join speeches from the mid-tier Federal Reserve (Fed) officials to entertain the intraday traders.

Technical analysis

USD/CAD pair’s latest inaction fails to disappoint buyers unless the quote drops below the 200-DMA support of 1.3455. That said, a downward-sloping resistance line from October 13, 2022, around 1.3680 by the press time, restricts the immediate upside of the Loonie pair.