USD/CAD corrects to test bear commitments at 1.35

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  • USD/CAD bulls enter to test 1.35.
  • WTI is supporting a recovery in a dollar supply environment.

USD/CAD has consolidated in North American trade late as oil prices remain firm, helping the Canadian dollar correct from its weakest level in over two years. At the time of writing, the pair is up 0.3%, having moved from a low of $1.3409 to a high of $1.3544 on the day.

Elsewhere, the dollar has been supported by the Federal Reserve’s hawkish outlook on interest rates and after Russian President Vladimir Putin ordered the country’s first mobilization since World War II. As for safe haven, the DXY, which measures the currency against a basket of six currencies, hit a high of 111.814, the highest level since mid-2002.

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Oil’s rise came on the heels of China’s plans to increase its exports of refined products, according to the Reuters story, which stated that “Chinese refiners expect the government to issue export quotas of 15 million tonnes of refined products for the rest of the year, since Beijing intends to strengthen the exports of the world’s largest oil importer”.

Russian President Putin said in a speech late Tuesday that he planned to mobilize an additional 300,000 troops to bolster the country’s war against Ukraine, where it has ceded swathes of territory occupied in recent fighting, increasing the pressure on the dollar.

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Elsewhere, supporting the dollar, the Federal Reserve’s 75 basis point hike in US interest rates on Wednesday remains a problem for the market as the central bank looks to combat inflation by slowing of the economy and reduced demand.

Fed Keys

  • US Federal Reserve interest rate decision +75 basis points vs. +75 basis points expected.
  • The target range is 3.00% – 3.25%.
  • The interest rate on reserve balances increased by 75 basis points to 3.15% from 2.40%.
  • The vote on the policy was unanimous.
  • The Fed anticipates that continued hikes will be appropriate, and is prepared to adjust policy accordingly.
  • Board members are very alert to inflation risks and firmly committed to returning inflation to 2%.
  • Recent indicators point to modest growth in spending and output.
  • The war in Ukraine creates additional upward pressure on inflation, which is weighing on global economic activity.
  • Inflation remains high, reflecting imbalances related to the pandemic and rising food and energy prices.
  • Job gains have been robust, the unemployment rate has remained low.
  • The median forecast shows rates of 4.4% at the end of 2022.
  • Futures after the FOMC decision imply that traders see an 89% chance that the Fed will raise rates by another 75 basis points at the November meeting.

Next item on the agenda is Canadian Retail Sales data for July, due out on Friday. This could give markets more information to gauge the Bank of Canada’s outlook on rates.

USD/CAD

Overview
last price today 1,349
daily change today 0.0030
Today’s daily variation in % 0.22
Daily opening today 1,346
Trends
daily SMA20 1.3145
daily SMA50 1.2995
daily SMA100 1.2926
daily SMA200 1.2804
levels
Previous daily high 1.3468
Previous Daily Low 1.3358
Previous Weekly High 1.3308
Previous Weekly Low 1.2954
Previous Monthly High 1.3141
Previous Monthly Low 1.2728
Daily Fibonacci of 38.2%. 1.3426
Daily Fibonacci of 61.8% 1.34
Daily Pivot Point S1 1.3389
Daily Pivot Point S2 1.3318
Daily Pivot Point S3 1.3279
Daily Pivot Point R1 1.35
Daily Pivot Point R2 1.3539
Daily Pivot Point R3 1,361

Source: Fx Street

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