- USDCAD is about to rise as the US dollar reaffirms.
- WTI is pressured by the Covid cases in China, taking a toll on the CAD.
The USDCAD tracks higher on Monday, partly on lower oil prices and the dollar’s recovery against a basket of major currencies. The dollar rallies as investors keep their eyes on the Federal Reserve’s rate hike path. Before the open, a Fed staffer threw cold water on the surprise rise in the US Consumer Price Index, arguing that it was too early to call for a pivot.
At time of writing, USDCAD was trading at 1.3286, up 0.27% on the day, having traded between a low of 1.3239 and 1.3309 so far. The Dollar Index, DXY, is up 0.2% from a low of 106.41 and hit a high of 107.27 so far, supported by comments from Federal Reserve Governor Christopher Waller. He crossed the wires, saying Friday’s inflation report was “just data” and that markets are “way ahead of time.”
Meanwhile, US and Canadian government bond yields have been mixed following the Veterans Day and Remembrance Day holidays on Friday. In this regard, we will have the Canadian inflation data for October, which will be released on Wednesday. This could offer clues about the Bank of Canada’s policy outlook. Money markets expect the central bank to raise interest rates by at least 25 basis points in its December 7 monetary policy announcement.
On the other hand, the price of oil has fallen since the beginning of the day. Reports of rising new Covid-19 infections in China, even after the country relaxed some of its lockdown policies last week, have taken a toll on market stability. West Texas Intermediate crude is down 3.3%. The fall has occurred, according to Reuters, after the news agency reported that “new Covid-19 infections are increasing in Beijing and other cities, even as the country, the world’s largest oil importer, relaxed last week some of their quarantine policies”. The first importer of oil, relaxed last week some of the “Zero-Covid” policies, which paralyze the main cities for weeks, reducing demand, while the new policies are considered a support for the country’s economy. ‘.
USDCAD weekly chart
The M formation is a compelling bullish trait, but there could still be some downside.
A break of the support opens the way to the support of the dynamic trend line.
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.
