USD / CAD locked at 1.2450 zone despite rising crude oil prices

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  • The loonie has not benefited from an increase in the price of crude, with USD / CAD locked in the 1.2450 region.
  • The BoC governor wanted to impress the public at the weekend by saying that the central bank would control inflation.

In keeping with the mostly moderate trading conditions in the G10 currency markets, it has been a pretty dull day for him. USD / CAD, with the pair moving sideways for most of the session within a few pips of the 1.2450 level. It is notable that the pair failed to test, much less break north of its 200-day average, moving around 1.2480 at the end of last week. As is often the case in currency markets, the rejection at a key moving average (such as the 200 DMA) can be interpreted as a technical bearish signal. There are support in the 1.2430 area, but if the bears push the pair below that level, the next notable support is at the 21 DMA just below 1.2400.

USD / CAD was pushed higher from below 1.2400 by a sharp drop in crude oil prices towards the end of last week, but has not been able to track a subsequent recovery with crude prices pushing lower. WTI prices rose nearly a dollar on Monday and returned to trading north of the $ 82.00 level, more than $ 3.50 above last week’s lows. It appears that market participants are taking a breather after the chaotic week that has just ended.

In terms of news relevant to the pair, BoC Governor Tiff Macklem spoke over the weekend and reiterated his expectation that the rise in inflation will be transitory. However, he was eager to impress the public by arguing that the central bank would keep inflation under control. At the latest meeting of the Bank of Canada, the statement opened the door for rate hikes as early as the second quarter of 2022.

Meanwhile, some Fed speakers made speeches on Monday. Fed Vice Chairman Richard Clarida reiterated a previously held stance that the conditions for rate hikes could be met by the end of 2022, perhaps a more dovish stance than market participants expected given the recent evolution of the rate. inflation. Meanwhile, St. Louis Fed Chairman James Bullard, who will be a voter in 2022, was optimistic and said he sees one of the “hottest” labor markets in the postwar period and that we could see the rate of unemployment dropping below 4.0% in the first quarter of 2022. Comments from other Fed members, including Patrick Harker, Michelle Bowman and Charles Evans, largely stuck to the script set at the last meeting. Meanwhile, Fed Governor Randall Quarles will step down at the end of the year.


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