Home Forex USD/CAD juggles above 1.3330 on calm market sentiment, oil stabilizes around $78.00

USD/CAD juggles above 1.3330 on calm market sentiment, oil stabilizes around $78.00

by SuperiorInvest
  • USD/CAD faces the immediate 1.3340 hurdle in the absence of a potential trigger.
  • Market sentiment has calmed as the US economy celebrates Thanksgiving.
  • A drop in oil prices due to rising Covid-19 infections in China weighed on the Canadian dollar.

The USD/CAD pair is showing forward movements as well as another typical Friday session. The Lonnie asset is struggling around 1.3340 after witnessing a recovery from below 1.3320. The bullish reversal cannot be applied yet because it passes through various filters. There is no doubt that trading activity is low due to Thanksgiving, but market sentiment is still solid.

USD Index (DXY) trades like a dead cat amid the unavailability of any potential trigger due to the light economic calendar. However, the hangover from less hawkish comments from the Federal Open Market Committee (FOMC) minutes will continue to weigh on the US dollar. Meanwhile, yields on 10-year US Treasuries fell below 3.69%.

US long-term yields are expected to remain on tenterhooks as the Federal Reserve (Fed) is expected to move to lower interest rate hikes at its December monetary policy meeting. Commentary from Fed policymakers, according to the FOMC minutes, suggests that financial risks in the United States economy are accelerating as a result of extreme policy tightening.

A slowdown in the pace of rate hikes would therefore reduce these risks while providing an opportunity to monitor the impact of the efforts made by Fed reduce inflationary pressures.

On the Canadian dollar front, investors are looking ahead to the third quarter gross domestic product (GDP) release on Tuesday. On a quarterly basis, GDP data is expected to decline to 0.4% from the previous 0.8%. This could be nice for the Bank of Canada (BOC), as a slowdown in the economy is necessary to cool ultra-high inflation.

Meantime, oil prices stabilized around the critical $78.00 level after a steep decline. This does not represent a reversal situation, but a stock spread that could lead to further weakness. The rising number of Covid-19 infections in China has led to a significant drop in economic projections. It is worth noting that Canada is the leading exporter of oil to the United States, and the drop in oil prices has an impact on Canadian dollar.

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