- USD/CAD has risen on risk-off momentum, spurred by US-China geopolitical jitters.
- In the currency space, haven pairs like the dollar, yen and Swiss franc are appreciating.
- Fed Daly: The Fed must remain committed to reducing inflation.
The USD/CAD it rises above the 50-day EMA, due to several factors, such as the visit of the Speaker of the US House of Representatives, Nancy Pelosi, to Taiwan and the growing tensions between the US and China. This coupled with expectations that the Federal Reserve will move away from a perceived “dovish” tilt as Chairman Powell acknowledged that spending and output have softened.
USD/CAD is trading at 1.2857 after hitting a daily low of 1.2835, before bouncing off daily lows and rising to its daily high at 1.2887.
USD/CAD advanced on risk aversion
Global equities remain under pressure. Although with a hiccup on the rise, when it was learned that the plane of the president of the House of Representatives, Pelosi, landed, the dust begins to calm down and equities are back in the red. Earlier, US data showed signs of tightening in the labor market, as the US JOLTS Openings reported vacancies fell to 10.7 million, their lowest level since September 2021.
Meanwhile, the Dollar Index, a gauge of the USD’s value against a basket of peers, is up 0.05% at 105.882, supported by safe-haven flows, as geopolitical tensions rise, weighing on the Loonie.
Fed officials have begun to cross wires. San Francisco Fed President Mary Daly said that so far she is “satisfied” with the Fed’s decisions, but that the Fed is “nowhere near” finished fighting inflation. She added that the Fed needs to “stay engaged until we see it in the data.”
On the Canadian side, the S&P Global Manufacturing PMI remains in expansion territory, around 52.5, well below forecasts, and below June’s 54 reading.
Crude oil prices, on the other hand, are beginning to rise, slowing the rise in USD/CAD, due to the positive correlation of CAD with oil. WTI is trading at $94.00 PB, slightly up 0.25%.
What to do
Other Fed speakers will make statements throughout the day, led by Charles Evans, Loretta Mester and James Bullard.
USD/CAD Key Technical Levels
Source: Fx Street
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