USD/CAD fades bounce off monthly low near 1.2650 on firmer oil prices, tepid sentiment
- USD/CAD stays pressured around intraday low, reverses the previous day’s rebound.
- Market sentiment dwindles amid Fed-linked anxiety, covid updates.
- Oil prices cheer softer yields, USD weakness to snap two-day downtrend.
USD/CAD remains on the back foot around 1.2650, down 0.17% intraday heading into Tuesday’s European session.
In doing so, the Loonie pair pays a little heed to the virus woes at home while cheering the cautious optimism at a macro front. Also favoring the quote are the firmer prices of Canada’s main export item, namely WTI crude oil.
“The US Centers for Disease Control and Prevention (CDC) and U.S. State Department on Monday advised against travel to neighboring Canada because of a rising number of COVID-19 cases as the Omicron variant spreads,” said Reuters. However, the news may become less worrisome compared to the Reuters’ tally that suggests a new record top of the US daily infections above 1.13 million.
On a different page, The hawkish comments from Fed Chair Jerome Powell, per the prepared remarks for today’s Testimony, could be considered as a major favor to the risk-on mood. The Fed Boss said, “The economy is growing at its fastest rate in years, and the labor market is robust.” However, his pledge to stop higher inflation from getting entrenched keeps the rate hike concerns on the table and weighs on the sentiment.
It’s worth noting that comments from Merck’s official saying, “Expect Molnupiravir mechanism to work against omicron, any covid variant,” could be cited as positive for the risk appetite.
Elsewhere, oil prices rise 0.33% intraday around $78.25 at the latest, snapping two-day declines, as the market’s optimism weighs on the US dollar’s safe-haven demand ahead of the key data/events.
While portraying the mood, the US 10-year Treasury yields dropped 1.5 basis points (bps) to 1.757% after rallying to January 2020 levels during the previous day, before closing in negative on D1. Further, the 2-year bond coupons remain steady around March 2020 levels, near 0.90% at the latest. Additionally, S&P 500 Futures print 0.07% intraday gains while stocks in the Asia-Pacific region trade mixed by the press time.
Looking forward, market players will keep their eyes on the covid updates for intermediate moves but Fed Chair Powell’s testimony and US Consumer Price Index (CPI) for December will be crucial for clear direction.
Read: US Consumer Price Index December Preview: The Fed’s die is cast
Technical analysis
Although 50-DMA, around 1.2700 at the latest, restricted USD/CAD recovery the previous day, the pair buyers remain hopeful until the quote prints a daily closing below the 100-DMA level of 1.2630.
Reprinted from FXStreet_id,the copyright all reserved by the original author.
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