- USD/CAD falls to seven-week lows on Monday pressured by a combination of factors.
- Risk appetite and rising commodities prop up the loonie and put pressure on the dollar.
- The diminishing odds of more aggressive Fed rate hikes are also weighing on the dollar.
The pair USD/CAD remains under strong selling pressure for the second day in a row and falls to its lowest level since late November heading into the North American session on Monday. The pair is currently sitting around the 1.3380-1.3375 zone, down almost 0.50% on the day, and is being pressured by a combination of factors.
The Canadian dollar It continues to receive support from the encouraging national employment data on Friday, which raised expectations of additional rate hikes from the Bank of Canada. Additionally, a strong intraday recovery of more than 3% in oil prices, bolstered by the further turnaround from China away from its strict zero-COVID policy, underpins the loonie. This, along with the continued selling bias of the US dollar, contributes to the bearish tone surrounding the USD/CAD pair and the ongoing bearish trajectory.
The release of the US monthly employment report (NFP) and the disappointing release of the US ISM services PMI on Friday raised bets for a less aggressive tightening of policy by the Fed. Indeed , markets are pricing in a 25 basis point Fed rate hike in February, bolstered by a further decline in Treasury yields. On the other hand, the generally positive tone in the equity markets has also contributed to putting additional pressure on the USD/CAD pair.
That being said, concerns about a deeper global economic downturn are keeping optimism in the markets at bay, which could help limit USD losses. However, the USD/CAD pair breaking below the 100 SMA technically significant. Also, a subsequent drop below 1.3400 could be seen as a new trigger for bears. The lack of relevant macroeconomic data, both from the US and Canada, could support the prospects of a further depreciation movement in the pair.
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.
