He USD/CAD has recovered more than 50 pips this Wednesday, rising above 1.3400 by mid-morning Europe to reach new six-day highs at 1.3436.
A combination of factors weigh heavily on the Canadian dollar, which coupled with a rally in the dollar acts as a tailwind for USD/CAD. Despite declining US inventories and strong Chinese economic data, Oil prices fall to a new monthly low amid concerns that rising borrowing costs will slow economic growth and curb inflation. fuel demand. Aside from this, signs of cooling inflation in Canada undermine the commodity-linked CAD.
On the other hand, the dollar is supported by a new rise in US Treasury bond yields, reinforced by the prospects of a further tightening of monetary policy by the Federal Reserve (Fed). Indeed, markets have almost fully priced in a 25 basis point hike in May and Fed funds futures indicate a slim chance of another rate hike in June. This, in turn, pushes the yield on the benchmark 10-year US government bond and the rate-sensitive two-year note to multi-week highs.
Meanwhile, the latest momentum to the upside confirms the breakout of the 200-day SMA, which, together with the aforementioned support, suggests that the path towards a further rise in interest rates in June- This suggests that the path of The lowest resistance for the USD/CAD pair is to the upside. In the absence of market-relevant economic data on Wednesday from both the US and Canada, investors will focus on the Fed’s Beige Book release later in the US session for sentiment. from the central bank on the state of the US economy.
This, coupled with US bond yields, will boost demand for dollars and provide some boost to USD/CAD. In addition, the Energy Information Administration (EIA) Oil inventories will be published, which should influence the dynamics of Oil prices and contribute to generating short-term opportunities around the main currencies.
USD/CAD 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.
