- USD/CAD gains some positive traction and climbs to 1-week highs on Tuesday.
- A combination of factors continues to support the dollar and support the pair.
- The intraday rise in crude oil props up the Loonie and limits any significant advance.
The pair USD/CAD fails to capitalize on its positive intra-day move and falls back a few pips from the 1.3550 zone, or above a one-week high reached earlier this Tuesday. The pair is trading slightly positive ahead of the North American session and is currently sitting just above the key 1.3500 psychological level.
Crude oil prices rise more than 1% on hopes of improving US fuel demand and supply disruptions in Canada due to wildfires in the oil-rich province of Alberta. This, in turn, supports the commodity-linked Loonie and turns out to be a key factor acting as a headwind for the USD/CAD pair, although a resurgence in demand for US dollars (USD) should help limit the fall, at least for the moment. Indeed, the Dollar Index (DXY), which measures the dollar’s value against a basket of currencies, has hit two-month highs and is supported by a combination of factors.
Rosy remarks from a group of influential Federal Reserve (Fed) officials overnight raised market bets that the US central bank will keep interest rates higher for longer. This, along with the hope that US politicians can reach a debt ceiling deal, keeps Treasury yields up and continues to benefit the dollar. Apart from this, concerns about slowing global growth, especially in China, further favor the dollar’s relative safe-haven status and help limit any significant pullback in the USD/CAD pair, at least for now.
Market participants are now looking forward to the US economic calendar, with preliminary impressions from the PMI, new home sales data and the Richmond Manufacturing Index. This, along with the debt ceiling and US bond yield talks, will influence demand for the dollar and give the USD/CAD pair some momentum. Traders will follow the dynamics of oil prices to take advantage of short-term opportunities. Meanwhile, the aforementioned mixed fundamental background and recent range-bound price action seen over the past week warrant some caution before making directional bets.
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.
