- USD/CAD remains below the 1.3500 psychological level due surge in Crude oil prices.
- Fed’s hawkish stance is reinforcing the bullish momentum of the US Dollar.
- Higher US Treasury yields are providing support for the solid Greenback.
- The prices of liquid gold exceeded one-year highs due to global supply reduction and cautious optimism toward the Chinese economic situation.
USD/CAD extends losses on the second successive day, trading lower around 1.3490 during the early European trading hours on Thursday. The pair is facing challenges due to the surge in Crude Oil prices.
Crude oil prices surged to levels exceeding one-year highs due to ongoing indications of a tightening global supply and cautious optimism regarding an economic recovery in China, which is the world's largest oil importer. WTI price continues the winning streak for the third consecutive day, trading above $93.20 per barrel by the press time.
EIA Crude Oil Stocks Change data on the week ending September 22 showed that stocks decreased by 2.170 million barrels compared with the 2.135 million drawdowns seen a week earlier. Markets expected Oil stockpiles to decline by a much lesser 0.32 million barrels.
The decline in US crude inventories raises concerns about economic downfall stemming from rapidly rising borrowing costs, which supports WTI prices. This, in turn, could undermine the USD/CAD pair as Canada is one of the largest oil exporters to the United States (US).
The US Dollar Index (DXY) extends its gains at its highest levels since December, bolstered by risk aversion, higher US Treasury yields, and economic data. The spot price is hovering around 106.70 by the press time.
The DXY is reinforced by solid macroeconomic data from the US. The US Dollar’s (USD) strength is attributed to the positive performance of US Treasury yields over an impending US government shutdown.
The yield on the 10-year US Treasury note has reached record highs, with standing at 4.61% at the time of writing.
Federal Reserve (Fed) board members. Neel Kashkari, President of the Minneapolis Federal Reserve, recently indicated the potential for further interest rate hikes in the future. The hawkish tone from a Fed member might have supported the bullish momentum of the USD.
Additionally, Kashkari suggested that the option of keeping interest rates unchanged at their current levels remains open, especially if any potential rate cuts are postponed even further. These remarks from Fed officials are contributing to the upward trajectory of the Greenback.
In August, US Durable Goods Orders rebounded with a 0.2% increase, a notable turnaround from the previous month's 5.6% decline. This performance exceeded market expectations, which had anticipated a 0.5% decline.
Market participants will likely watch Canada’s Gross Domestic Product (GDP) on Friday. Along with, the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation will be eyed., which is expected to reduce from 4.2% to 3.9%.
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 trades sideways below 1.0450 amid quiet markets
EUR/USD defends gains below 1.0450 in European trading on Monday. Thin trading heading into the Xmas holiday and a modest US Dollar rebound leaves the pair in a familair range. Meanwhile, ECB President Lagarde's comments fail to impress the Euro.
GBP/USD stays defensive below 1.2600 after UK Q3 GDP revision
GBP/USD trades on the defensive below 1.2600 in the European session on Monday. The pair holds lower ground following the downward revision to the third-quarter UK GDP data, which weighs negatively on the Pound Sterling amid a broad US Dollar uptick.
Gold price sticks to modest gains; upside seems limited amid USD dip-buying
Gold price attracts some follow-through buying at the start of a new week and looks to build on its recovery from a one-month low touched last Thursday. Geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East, along with trade war fears, turn out to be key factors benefiting the safe-haven precious metal.
The US Dollar ends the year on a strong note
The US Dollar ends the year on a strong note, hitting two-year highs at 108.45. The Fed expects a 50-point rate cut for the full year 2025 versus 4 cuts one quarter earlier, citing higher inflation forecasts and a stubbornly strong labour market.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.