- USD/CAD rises for the second day in a row on Monday amid falling oil prices.
- The decline in US bond yields weakens the USD, although it does not make it too difficult for the pair to rise.
- US housing market data could create short-term opportunities today.
He USD/CAD extends last week's bounce from the 1.3440 support zone and gains ground for the second consecutive day on Monday. The pair maintains modest intraday gains during the first half of the European session and is currently trading around the 1.3525 region amid weak crude oil prices.
Market participants maintain uncertainty about fuel demand outlook, amid expectations that rising borrowing costs will dent economic activity in the US, the world's largest oil consumer. This, in turn, Crude oil prices move away from a multi-week high reached last Thursday, which is seen undermining the CAD, a currency linked to raw material prices. Besides, Canada's consumer inflation figures, released last week, were lower than expectedwhich puts additional pressure on the Canadian Dollar (CAD) and provides support to the USD/CAD pair.
Meanwhile, the intraday rally does not appear to be affected by US Dollar (USD) weakness, driven by the pullback in Treasury yields. Having said that, growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer favors USD bulls and suggests that the path of least resistance for the USD/CAD pair is up. However, it remains to be seen whether the pair could extend the momentum amid concerns over supply disruptions in the Middle East, which could act as a tailwind for crude oil prices.
Going forward, the release of new home sales data in the United States, along with US bond yields and overall risk sentiment, could boost demand for the Dollar and give a boost to the USD/USD pair. CAD. Investors will follow the dynamics of oil prices to take advantage of some short-term opportunities. However, attention will remain focused on the US core PCE price index, which will play a key role in influencing the Fed's future monetary policy decisions and determining the near-term path for the pair.
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.
