USD/CAD touches over one-week high, around 1.3550-55 area amid stronger USD – by hareshmenghani USDCAD Fed RiskAversion BOC Currencies
ntraday uptick is sponsored by the emergence of aggressive US Dollar buying and lifts spot prices to over a one-week high, around the 1.3555 region in the last hour.
Against the backdrop of reviving bets for further tightening by the Federal Reserve , the risk-off impulse boosts demand for the safe-haven USD and assists the USD/CAD pair to build on last week's rebound from the 1.3400 mark, or its lowest level since February 16. In fact, the markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC meeting in May and the bets were reaffirmed by the mostly upbeat US monthly jobs report released on Friday.
The global risk sentiment, meanwhile, took a hit in the wake of heightening US-China tensions over Taiwan. This is evident from a fresh leg down in the equity markets, which, in turn, forces investors to take refuge in traditional safe-haven assets, including the Greenback. Furthermore, subdued action around, despite looming supply cuts from OPEC+, fails to benefit the commodity-linked Loonie.
The Bank of Canada is scheduled to announce its policy decision on Wednesday and will be accompanied by the latest US consumer inflation figures. This will be followed by the release of the FOMC meeting minutes, which will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the USD/CAD pair. Traders will further take cues from the release of the US monthly Retail Sales figures on Friday.
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