In sluggish markets ahead of key events, USD/CAD maintains moderate losses.
Prior to Powell’s speech, hawkish Fed bets have failed to cheer the US Dollar.
Market cautious optimism has WTI crude oil poised for its first weekly gain in five weeks around $72.50.
Even as divergence between the Fed and the BoC regains attention, Loonie pair buyers are encouraged by fears of US-China relations and the US debt ceiling.
Bulls and bears compete with the recent decline in the US dollar versus the rebound in WTI crude oil amid early Friday morning in Europe as USD/CAD flirts with the 1.3500 round figure. The market’s cautious attitude ahead of the key events is justified by the Loonie pair’s actions.
Despite this, the headlines suggesting that the US House Freedom Caucus might be able to block any agreement to raise the $31.4 trillion debt ceiling cause the US Dollar Index (DXY) to fluctuate at its highest level in two months. The same motivates recent DXY buyers and amplifies US default woes. The US-Taiwan trade agreement also challenges the optimists ahead of the scheduled meetings between China’s Commerce Minister Wang Wentao, USTR Tai, and US Commerce Secretary Gina Raimondo.
On the other hand, WTI crude oil is expected to rise to $72.50 at the latest, marking its first weekly gain in five weeks. It is important to note that the DXY anticipates the second week of gains, but it does not affect the energy price despite hopes of increased commodity demand as a result of the absence of a US default and expectations of further easing in China.
Somewhere else, a downturn in the market’s wagers on the US Central bank (Took care of) rate cut in 2023, as well as an expansion in the chances of a 0.25% rate climb in June, joined firmer US information and hawkish Took care of converses with beforehand drive the DXY. Furthermore inclining toward the greenback bulls, as well as energizing the USD/computer aided design, were worries that the US policymakers will actually want to beat the default fears.
After rising to the highest levels since August 2022 the day before, the S&P500 Futures struggled to reclaim the annual high amid these plays, printing modest gains near 4,220. In a similar vein, stocks in the Asia-Pacific region trade mixed, and the US 10-year and two-year Treasury bond yields struggle to extend the five-day uptrend at the monthly peak.
Continuing on, Canada’s Walk month Retail Deals, expected – 1.4% Mother versus – 0.2% earlier, will go before Took care of Seat Jerome Powell’s discourse to coordinate intraday moves of the USD/computer aided design. However, the press conference that US President Joe Biden will likely hold late on Sunday to discuss the debt ceiling extension will receive a lot of attention.
The 100-DMA and a two-month-old resistance line prevent short-term upside for the Loonie pair near 1.3510 and 1.3565, in that order. As a result, USD/CAD is still susceptible to further declines.