Home Forex USD/CAD struggles with weekly lows amid bearish USD, oil prices rise

USD/CAD struggles with weekly lows amid bearish USD, oil prices rise

by SuperiorInvest
  • USD/CAD recovers from a weekly low on Friday, amid continued selling around the US dollar.
  • Less hawkish FOMC minutes and positive risk tone continue to weigh on money.
  • A rise in oil prices is supporting the Loonie and contributing to a slight decline in the pair.

The USD/CAD the pair remains under some selling pressure for a fourth straight day on Friday, falling to a new weekly low heading into the European session. However, spot prices are managing to hold above the 1.3300 round-number mark and remain at the mercy of US dollar price dynamics.

The dovish assessment of FOMC meeting minutes released on Wednesday continues to weigh on currencies and is seen as a key factor acting as a headwind for the USD/CAD pair. In fact, officials were largely satisfied that they could stop accelerating rate hikes and that slowing the rate hike cycle would soon be appropriate. That, in turn, cements expectations for a 50-basis-point hike at the FOMC’s December meeting and drags the yield on the benchmark 10-year U.S. Treasury note to its lowest level since early October.

Additionally, the generally positive tone around equity markets is seen as another factor weighing on the safe-haven dollar. Additionally, some subsequent rise in oil prices is supporting the commodity-linked Loonie, putting further downward pressure on the USD/CAD pair. However, concerns that the worsening COVID-19 situation in China will disrupt demand for the fuel are keeping any further gains for the black liquid under wraps. This in turn prevents traders from placing aggressive bearish bets around the USD/CAD pair.

In the absence of any significant economic data from the US or Canada, US bond yields and broader market risk sentiment will drive USD demand. In addition, traders will continue to take cues oil price dynamics to seize short-term opportunities around the USD/CAD pair. However, intraday momentum is likely to remain limited with relatively low trading volumes on the last day of the week.

Technical levels to watch

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