- USD/CAD grinds near intraday high while paring weekly losses.
- Oil price retreats from weekly top after rising the most in a fortnight.
- Risk dwindles amid US debt ceiling concerns but US Dollar remains firmer.
- Second-tier US/Canada data, risk catalysts eyed for clear directions.
USD/CAD seesaws around the intraday top of near 1.3470-75 heading into Thursday’s European session. In doing so, the Loonie pair buyers cheer recently easy Oil price and the US Dollar’s sturdy moves at the multi-day high amid a sluggish performance of the market.
That said, the WTI crude Oil prints mild losses near $72.60 as it consolidates the biggest daily gains in two weeks amid slightly offbeat market conditions. Adding strength to the bearish bias surrounding the black gold is the US Dollar’s strength and expectations of slower energy demand, mainly due to softer China data and recession woes in the West.
With this, the US Dollar Index (DXY) buyers keep the reins at the highest levels in seven weeks, mildly bid near 102.90 by the press time.
It’s worth noting that the recent increase in the bullish bets surrounding the Fed’s 0.25% rate hike in June, around 20% at the latest versus previous expectations favoring no such actions in 2023, favor the US Dollar bulls. Also supporting the greenback buyers are comments from US President Joe Biden and House Speaker Kevin McCarthy managed to convince the markets that they can unite to avoid the ‘catastrophic’ default, which in turn underpinned the market’s risk-on mood and propelled the US Dollar.
Amid these plays, S&P500 Futures print mild losses despite the upbeat Wall Street close whereas the US Treasury bond yields remain sidelined at the multi-day top. That said, the US 10-year and two-year Treasury bond yields rose to the highest levels since May 01 and April 24 while portraying a four-day uptrend near 3.57% and 4.16% respectively, easing to 3.56% and 4.14% by the press time.
Looking forward, the weekly US Jobless Claims and Philadelphia Fed Manufacturing Survey will join the Canadian Employment Insurance Beneficiaries Change and New Housing Price Index to entertain intraday traders of the USD/CAD pair. Above all, risk catalysts are key for clear directions.
Technical analysis
USD/CAD rebound remains elusive unless crossing a three-week-old descending resistance line, around 1.3540 by the press time. That said, multiple bounces off the 200-day Exponential Moving Average (EMA), around 1.3400 by the press time, join bullish MACD signals to keep the Loonie pair buyers hopeful.
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USD/CAD Tickles Mild Gains Below 1.3500 as Oil Price Pulls Back and USD Grinds Higher
The USD/CAD pair clings to mild gains below the 1.3500 mark on Thursday, despite the rise in US Dollar demand. Stepping in to counteract the positive US Dollar sentiment, Oil prices are altering their recent gains as OPEC and its allies prepare to begin discussions on potentially raising production levels.
At the time of writing, the USD/CAD is trading at 1.3495, up 0.17% on the day.
The greenback is edging higher on Thursday, along with expectations that the US Federal Reserve will act further to stimulate the economic recovery of the US, while oil prices are pulling back as anticipation for potentially pressure to raise oil production builds prior to OPEC and its allies’ meeting.
Earlier today, oil prices began to drop as OPEC and its allies – known as the OPEC+ alliance – hinted at the possibility of raising oil production from the current voluntary-agreed upon limits.
The OPEC+ alliance is expected to discuss the current deal and discuss how to change it on Thursday. Adding to this sentiment, a budget deal between OPEC and its allies was recently delayed due to disagreements between them and therefore the agreement is yet to be reached.
Therefore investors are increasingly feeling skeptical regulators will agree on a solution in the near term, which is helping to put downward pressure on oil prices.
In addition US Dollar is receiving a slight boost following the US Federal Reserve’s recent interest rate decision. The FOMC kept benchmark interest rates unchanged last week and committed to continue purchasing bonds over the near term.
Looking ahead, US Initial Jobless Claims figures will be featured on today’s economic calendar.
The report is expected to show that over 700,000 Americans filed new claims for unemployment last week, which could cause the US Dollar to slump.
Meanwhile the Canadian Dollar could receive a boost if Canada’s Retail Sales report for April, due today at 15:30 GMT, prints better than expected.
