The USD/CAD pair hit weekly high today at 1.3295 and has been trading uptrend since market opened for the day supported by dovish price action in crude oil market and a broad rebound in the U.S. Dollar. As of writing this article, the USD/CAD pair is trading at 1.3291 up by 0.21% and the pair seems to have found some level of support above 1.3280 there by closing the downside gap that was formed when trading session opened for the week. The pair remains in a broadly positive, although choppy, range that’s been unfolding for two weeks now. A safe haven dynamic has been buoying the US currency, despite lower Treasury yields amid an ongoing re-calibration of Fed policy expectations, where markets are now discounting a pause in the cycle, following a hike this month.
Slide in Crude Oil Price & USD Rebound on Hawkish Fed Comments Helped USD Regain Upper Hand
However the key factor for US Greenback’s recovery during the last 24 hours is positive comments from US FOMC member Williams who said that interest rate hike is set to occur as planned regardless of change in forward guidance which combined with risk averse market sentiment owing to fear of global economic slowdown helped the major see significant recovery price action. News of build in US crude oil inventory which painted a situation of glut forming in US markets resulted in WTI/USD going down by more than 1% which added to USD’s bull run as Loonie is a commodity (crude oil) linked currency and weaker crude oil price influenced bearish price action in Canadian Dollar. Liquidity is expected to be thin during American market hours today as US market is closed for the day in observance of a national day of mourning for President George H. W. Bush.
On release front, US market is relatively silent as no first tier data is scheduled to release today, however US calendar is scheduled to release Q3 Unit Labor costs and Markit Composite PMI data while Canadian calendar sees the release of BOC’s interest rate decision. Investors and analysts are of opinion that statement released today will not see any hike in interest rate and leaving it fixed at 1.75%. However investors expect comments on impact of crude oil price action in Canada’s economy since benchmark crude oil price plunged over 30% while western Canadian select saw ever more decline in value before crude output cut in Alberta region was announced. Any positive comments from BOC during rate decision update will help Canadian Loonie gain some ground amid holiday thin market.
This article was originally posted on FX Empire
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