- USD/CAD oscillates in a tight range and is influenced by a combination of divergent factors.
- A modest rally in crude oil prices benefits the CAD and acts as a headwind for the pair.
- A softer risk tone benefits the safe-haven USD and helps limit any significant decline in the pair.
- Traders now expect a further boost from Canadian consumer inflation and US macroeconomic data.
The pair USD/CAD it fails to rally strongly during the trading session on Tuesday, and is trading in a tight range at the start of the European session. The pair is currently around the 1.3400 levelvirtually unchanged on the day, and is influenced by a combination of divergent factors.
A Modest rebound in crude oil prices benefits CAD, a currency linked to commodity prices, and acts as a headwind for the USD/CAD pair. The negative factor is largely offset by some buying around the US dollar which in turn provides some support for the pair and helps limit the downside, at least for now.
The data published this Tuesday showed that China’s economy grew at a better-than-expected pace in the fourth quarter. In addition, improving trends in Chinese retail sales and industrial production fueled the optimism about an economic recovery in the world’s largest oil importer and acts as a tailwind for oil prices.
Nevertheless, concerns about a possible global recession prevent liquid gold from rising significantly. Traders are also reticent and prefer to stay on the sidelines awaiting OPEC’s monthly report, due to be released on Tuesday, which will take into account any changes in demand forecasts for the current year.
The US dollar, meanwhile, attracts some safe-haven money flows amid prevailing caution in the markets, though lacking bullish conviction amid the hopes of a less aggressive tightening of monetary policy by the Fed. The mixed fundamental background warrants some caution before positioning for a firm intraday direction for the USD/CAD pair.
In future, the focus will be on the Canadian consumer inflation figures, which will be published later during the American session. This, along with oil price dynamics, could influence the loonie. On the other hand, in the United States the Empire State Manufacturing Index will be published, which could give a new boost to the USD/CAD pair.
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.
