USD/CAD flirts with 100 DMA, just above 1.3500 amid rebounding Oil prices/softer USD – by hareshmenghani USDCAD RiskAppetite Fed Inflation Currencies
A modest rebound in Oil prices underpins the Loonie and exerts some pressure amid a softer USD.The USD/CAD pair
attracts some sellers near the 1.3565-1.3570 region, or over a one-week high touched earlier this Monday and extends its intraday descent through the first half of the European session. The pair is currently placed near the lower end of its daily trading range, just above the 1.3500 psychological mark, flirting with the 100-day Simple Moving Average and is pressured by a combination of factors.
The US Dollar takes a brief pause following the recent move up to its highest level since April and consolidates its strong gains recorded over the past two sessions, which, in turn, acts as a headwind for the USD/CAD pair. Apart from this, a modest bounce in Crude Oil prices from over a one-week low set earlier this Monday underpins the commodity-linked Loonie. This is seen as another factor exerting some downward pressure on the major, though any meaningful fall seems elusive.
In the absence of any relevant fundamental trigger, a positive risk tone around the equity markets is seen weighing on the safe-haven Greenback. That said, a further rise in the US Treasury bond yields, bolstered by speculations that the Federal Reserve might stick to its hawkish stance, should act as a tailwind for the USD. The preliminary May reading from the University of Michigan released on Friday showed that consumers see prices over the next five years climbing at an annual rate of 3.2%.
Furthermore, worries that a deeper global economic downturn will dent the fuel demand should keep a lid on any meaningful recovery for. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the upside and any subsequent downfall is more likely to be bought into. Traders now look to the US economic docket, featuring the Empire State Manufacturing Index.
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