Due to several variables, USD/CAD decreases for the second day. The Loonie is supported by rising Crude Oil prices, which put pressure on the pair as USD selling has resumed. Traders looking for short-term opportunities now anticipate the US PPI and Retail Sales statistics.
Following an early increase to the 1.3410 range, the USD/CAD pair draws new selling on Wednesday and falls for a second straight day. The continuous intraday decline, supported by several reasons, pushes spot prices to a new weekly low in the middle of the 1.3300s during the first part of the European session.
In anticipation of increased fuel consumption in China due to the relaxation of China’s rigorous COVID-19 regulations, crude oil prices have risen to their highest level since early December. As a result, the commodity-linked Loonie is supported, putting some downward pressure on the USD/CAD pair and developing vigorous intraday selling around the US Dollar.
In reality, expectations for a more gradual tightening of policy by the Fed cause the USD Index, which measures how the Greenback performs versus a basket of currencies, to lose some of its high intraday gains. The markets have been pricing a lesser 25 bps rate rise in February because they appear to be confident that the Fed would soften its stance.
The past week’s publication of the US CPI data, which showed indications of lessening inflationary pressure, confirmed the wagers. This caused a further decline in US Treasury bond rates, which is now substantially weighing on the US currency and pushing the USD/CAD pair down toward its lowest level since November 25, which was reached on Friday.
Market investors are currently focusing on the US data calendar, particularly the later in the early North American session scheduled publication of the Producer Price Index and the monthly Retail Sales. The demand for the USD will be fueled by this, remarks by significant FOMC members, US bond rates, and the general risk mentality of the market.
In addition, traders will use the oil price movements to identify short-term trading opportunities in the USD/CAD pair. However, the path of least resistance for spot prices seems negative as the fundamental backdrop favors bears. Any effort at recovery might thus be sold into.