- USD/CAD starts the new week with a weaker tone, although it shows resistance below 1.3400.
- The recovery in oil prices is supporting the Loonie and putting some downward pressure on the pair.
- A modest USD rebound from a multi-month low helps limit losses, at least for now.
The pair USD/CAD comes under strong selling pressure on Monday and falls to a 1-week low, though shows some resistance below 1.3400. However, the pair is trading in negative territory and now seems to have stabilized around the 1.3420-1.3425 area heading into the American session.
Crude Oil prices rise almost 2.5% on the first day of a new week as a reaction to OPEC+’s decision to cut production by 2 million barrels per day from November to 2023. In addition, positive signs of oil recovery Fuel demand in China, amid easing of strict COVID-19 restrictions, drive liquid black. This, in turn, supports the commodity-linked Loonie and puts some downward pressure on the USD/CAD pair.
However, the fall remains cushioned amid an intraday recovery of the dollar from its lowest level since the end of June, reached earlier this Monday. Concerns about a deeper global economic recession continue to weigh on investor sentiment, which is evident in a weaker tone around equity markets. This, coupled with a rally in US Treasury yields, offers some support for the safe-haven dollar.
The US monthly employment report (NFP) released on Friday and a surprise rise in wages point to a further increase in inflationary pressures. The data reaffirmed expectations that the US central bank will continue to tighten its monetary policy and validates Federal Reserve Chairman Jerome Powell’s forecast that the maximum interest rate will be higher than expected. This, in turn, is seen as a tailwind for US bond yields.
That said, recent comments by several FOMC officials support the prospects for relatively minor rate hikes from the US central bank. This, in turn, discourages dollar bulls from making aggressive bets and should stop any significant rally in the USD/CAD pair. The ISM Services PMI for the US will be released next, which could weigh on the dollar and give trading a bit of a lift.
USD/CAD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
