- USD/CAD awaits fresh clues to extend two-day downtrend.
- Firmer inflation at home joins strong WTI crude oil prices to favor bears.
- Risk-on mood, broad USD weakness adds strength to the bearish bias.
- US data, risk catalysts will be in focus amid a light calendar in Canada.
USD/CAD licks its wounds around three-month low, sidelined near 1.2320 during Thursday’s Asian session.
The Loonie pair refreshed the multi-day bottom during a two-day fall the previous day after the Canadian inflation data came out better-than-expected. Further, firmer prices of Canada’s main export item WTI crude oil and US dollar weakness added to the downside pressure.
In addition to Canada’s headlines Consumer Price Index (CPI) for September, the Bank of Canada’s (BOC) CPI Core figures also rose past YoY forecasts and prior readings. The same hints at the BOC’s further tightening of monetary policy and favor for the USD/CAD bulls.
Elsewhere, oil prices cheered lower-than-anticipated weekly inventory data from the Energy Information Administration (EIA), as well as US dollar weakness and risk-on mood. That said, WTI crude oil jumped to the fresh high since October 2014 of $83.55, around $83.40 by the press time.
That said, the US Dollar Index (DXY) prints a six-day south-run near the lowest levels in three weeks, flashing 93.60 level by the end of Wednesday’s North American session. The greenback gauge failed to benefit from the tapering signals from Federal Reserve Governor Randal Quarles as equities rallied on firmer earnings and the Treasury yields also softened after refreshing the multi-day top.
While portraying the mood, Wall Street benchmarks gained upside momentum amid strong Q3 reports from the industry leaders like Tesla and chatters over US stimulus passage. The same exerted pressure on the 10-year Treasury yields around 1.66%, up 2.6 basis points (bps), following the bond yields’ run-up to the five-month high.
Given the lack of major data/events, USD/CAD traders need to pay close attention to the risk catalysts and the second-tier US economics for fresh impulse.
Technical analysis
A clear downside break of 61.8% Fibonacci retracement of June-August upside, near 1.2365, directs USD/CAD towards late June’s low surrounding 1.2250 should the quote manage to conquer the 1.2300 immediate support.
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
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.