- USD/CAD moves lower on Wednesday amid the appearance of some selling around the dollar.
- Less hawkish Fed rate hike expectations and a positive risk tone weigh on the USD as a safe haven.
- A softer tone around crude oil prices weighs on the CAD and helps limit the pair’s decline.
- Traders expect US macro data to build some momentum ahead of the Fed Chairman’s speech.
The pair USD/CAD comes under some selling pressure on Wednesday and pulls back further from 3-week highs around the 1.3645 area touched the day before. The pair trades below the 1.3550 zone during the early part of the European session and was affected by a modest pullback in the US dollar.
A combination of factors keeps dollar bulls on the back foot, which in turn puts some downward pressure on the USD/CAD pair. Investors seem convinced that the Fed will slow down the pace of its policy tightening and have been pricing in a relatively minor 50 basis point rise in December. This is evident from the softer tone around US Treasury yields, which coupled with stability in stock markets weigh on the safe-haven US dollar.
Nevertheless, the USD/CAD pair’s slide seems supported by a modest intraday decline in crude oil prices, which tends to weigh on the CAD, a currency linked to commodity prices. The Fears that new outbreaks of COVID-19 in China will dent fuel demand casts a shadow over speculation that OPEC will announce further supply cuts at its meeting on Sunday. This, in turn, does not help black gold to capitalize on this week’s strong rally move from the yearly low.
Furthermore, traders are likely to refrain from entering aggressive positions, preferring to wait for Fed Chairman Jerome Powell’s speech later in the American session. Meanwhile, US economic data, with ADP Private Sector Employment Report, Q3 GDP Preview and JOLTS Job Openings, could give the USD/CAD pair some momentum. Investors will follow the dynamics of oil prices to take advantage of some short-term opportunities.
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.
