Forex » Canadian Dollar, Crude Oil and Bank of Canada

USD/CAD consolidates on forex towards 1.2660

USD/CAD consolidates yesterday’s forex gains around 1.2660, down 0.11% intraday during Asian trading on Thursday.

  • USD/CAD trims Fed gains to around a weekly high for the second day in a row this week.
  • The Federal Reserve and the Bank of Canada met market expectations, while Powell and Macklem were cautiously optimistic.
  • WTI crude oil prices remain firmer around the highest levels since October 2014.
  • Fourth quarter US GDP and Durable Goods Orders will be crucial for near-term guidance.

The pair US dollar/Canadian dollar did not welcome the hawkish Bank of Canada (BOC) verdict on Wednesday as the US Federal Reserve (Fed) matched upbeat market expectations. However, high prices for Canada’s top export, WTI crude oil, are pushing the price lower from a multi-day high.

That said, the US Federal Reserve (Fed) kept benchmark interest rates intact and cut targets at Wednesday’s Federal Open Market Committee (FOMC) meeting. However, the interesting part of the Monetary Policy Statement said: “The Committee expects that it will soon be appropriate to increase the target range for the fed funds rate.”

Fed Chairman Jerome Powell also spoke in tune with the aggressive signals from the US central bank, saying: “There is plenty of room to raise rates. However, comments from him such as “The path of the rate hike would depend on incoming data and noted that it was ‘impossible’ to predict” seem to have supported the latest USD/CAD pullback.

Before that, the Bank of Canada kept its benchmark interest rate unchanged at 0.25% while stating, according to Reuters, “the Bank of Canada has reiterated that it sees the slack to be absorbed by mid-2022 quarters.” Following the monetary policy verdict, Bank of Canada President Tiff Macklem said: “Interest rates will have to rise to counteract inflation. »

It should be noted that fears of supply disruption due to geopolitical risks emanating from Russia rejected the EIA’s moderate change to maintain the oil price WTI near the highest levels seen since October 2014, rising 0.70% to around $86.70 high.

Amid the games, stocks and commodities continue to lag, except for oil, as 10-year US Treasury yields rose to their highest in three weeks by eight basis points (bps) at the close of the North American session on Wednesday. at 1.87%.

Going forward, risky catalysts like Ukraine-Russia fights and Sino-US tensions could play a notable role in short-term moves in the USD/CAD pair, but particular attention will be paid to early trades. US GDP readings for the fourth quarter and Durable Goods Orders for December.

Technical analysis

USD/CAD holds the breakout of 5-week resistance despite the recent pullback, which in turn keeps buyers hoping to challenge the 50-DMA level again near 1.2710.

However, a break below the previous resistance around 1.2645 will require a clean break of the SMA-100 moving average around 1.2620 to convince the bears.

Par Anil Panchal, FXStreet

He worked with Edelweiss Financial Advisors Ltd from 2007 to 2013 as a research analyst for the commodities sector. Anil subsequently joined Admiral Markets from April 2013 to January 2019, where she worked as a Forex analyst. Job roles at both locations were to follow macroeconomics and perform fundamental and technical analysis of the commodity and foreign exchange markets, respectively. At FXStreet, she primarily writes asset/tech news articles on various currency pairs, commodity pairs, and even some stock markets. She also helps provide macro/event data summaries and bank reports when needed.

The opinions expressed herein are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, you should do your own research when making a decision.

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation to buy or sell foreign exchange contracts or CFDs. Although the information contained in this document comes from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect, or consequential damages that may result from anyone relying on such information.

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