- USD/CAD remains in bullish territory with the US dollar hitting new all-time highs for the bull cycle.
- Market volatility has dented CAD’s high beta on weak oil prices.
At 1.3770. USD/CAD is up over 1.3% on the day as the pair attempts to hold near daily highs at 1.3808, after rallying from daily lows at 1.3559. It’s been a strong day for US Treasury yields with high volatility in global currency markets causing the US dollar to extend gains to 114.52 according to the DXY index.
Investors remained concerned about the Fed’s aggressive policy tightening and its impact on the US economy, causing a sell-off across financial markets and a bid for the dollar. This also added an additional layer of volatility to markets, worried about a global recession amid rising prices. The CBOE Volatility Index hovered around three-month highs, while the 10-year US Treasury yield rose again on Monday, reaching 3.9020%, marking a new all-time high since April 2010.
The CAD is not immune to these deteriorating conditions,” analysts at TD Securities said. ”We were bearish on the CAD for fundamental reasons, as the debt service issue should start to manifest itself and create a data domino for the rest of the year, while worsening global growth meant the currency would also be on the downside. the defensive”.
“With oil prices retreating as global demand declines, the CAD will continue to struggle.” If you didn’t like CAD a week ago, there’s more reason to despise it even more. We are entering the USD/CAD FOMO phase.”
The price of oil, one of Canada’s main exports, recovered some recent losses as market participants awaited details on the new sanctions on Russia. However, oil had fallen to fresh eight-month lows as recession concerns continue to dominate trading, while the US dollar continues to strengthen. WTI is still down over 3.4% on the day to $76.63.
Looking at national data, wholesale trade rose 0.8% in August from July, largely driven by increased sales in the food, beverage and tobacco subsector, according to a preliminary estimate from Statistics Canada. . Meanwhile, more than a third of customers in the Canadian province of Nova Scotia lost power on Monday, two days after powerful storm Fiona hit the country’s east coast.
Source: Fx Street
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