- Expectations of a less pessimistic Fed act as a tailwind for the USD and offer some support to the USD / CAD.
- The current bullish streak in oil prices supports the CAD and limits any significant gains in the pair.
- Market participants are expecting Canadian consumer inflation figures to get some momentum ahead of the FOMC.
The pair USD / CAD It has bounced around 20 pips from the lows of the European session and is trading near the upper end of its daily trading range, just below the 1.2200 level.
A modest drop in U.S. Treasury yields has kept the US dollar bulls on the defensive during the first half of trading action on Wednesday. However, expectations of a less pessimistic Fed have helped put a possible bottom under the USD, offering some support to the USD / CAD pair.
Investors appear to have now begun pricing out prospects for a withdrawal of the stimulus earlier than expected amid concerns about rising inflationary pressure. The concerns were further fueled by Tuesday’s US Producer Price Index, which rose 0.8% in May and it accelerated 6.6% year-on-year.
Meanwhile, the support factor, to some extent, has been offset by the strong bullish sentiment prevailing around crude prices, which tend to benefit the CAD, currency linked to the prices of raw materials. This, in turn, appears to be the only factor that could limit any significant rally for the USD / CAD pair.
Investors may also prefer to wait on the sidelines ahead of the expected monetary policy decision from the FOMC, which will be released later during the American session. This will play a key role in influencing USD price dynamics in the near term and providing new directional momentum to the USD / CAD pair.
Before the key event, investors will face the release of the latest Canadian consumer inflation figures. This, along with oil prices, could generate some significant trading opportunities at the start of the American session.
USD / CAD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
