- USD/CAD continues to lose ground for the third day in a row and falls to almost three-week lows.
- A fresh recovery in oil prices benefits the CAD and puts pressure on the pair amid a weaker USD.
- The lowering of expectations for a new Fed rate hike in June weighs on the dollar ahead of the NFP report.
The pair USD/CAD falls for the third day in a row on Friday, also marking the fifth day of negative movement in the previous six, and falls to two and a half week lows during the early stages of the European session. The pair is currently trading around the 1.3415 areadown more than 0.20% on the day, and is being pressured by a combination of factors.
Crude oil prices extend gains from previous day’s strong recovery and rise another 1% on the last day of the week, which in turn benefits the CAD, a currency linked to commodity prices. Besides, The US dollar remains under pressure on expectations that the Federal Reserve (Fed) will probably not raise interest rates at its meeting at the end of the monthfurther contributing to the selling tone around the USD/CAD pair.
In fact, the president of the Philadelphia Fed, Patrick Harker, reiterated Thursday that it is time to hit the pause button for at least one meeting. and see how it evolves. This, coupled with recent comments from several influential FOMC officials, forced investors to lower their expectations for another 25 basis point hike in June. This caused a further decline in US Treasury yields on Thursday and continues to weigh on the dollar.
Besides, the passage of legislation to raise the US government’s debt ceiling. at $31.4 trillion and avoiding an unprecedented US default boosts investor confidence. Optimism continues to support a risk-positive tone around equity markets and turns out to be another factor weighing on the safe-haven USD. This, in turn, supports the prospects for a further intraday drop in the USD/CAD pair.
Traders, however, may refrain from taking aggressive positions and would prefer to wait on the sidelines before the release of the US monthly jobs data, due later in the American session. The well-known NFP report will play a key role in driving demand for the USD, which together with the dynamism in oil prices, should allow traders to take advantage of some short-term opportunities around the USD/CAD pair.
USD/CAD technical levels to watch
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.
