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The Bank of Canada raise rates by a surprise 100 basis points this week, preemptively tightening policy.
Despite the price high, the CAD weekend further yesterday helped by overall USD buying.
The Bank of Canada raise rates by a surprise 100 basis points this week, preemptively tightening policy.
Despite the price high, the CAD weekend further yesterday helped by overall USD buying.
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Helping the move higher in the CAD is a rebound in crude oil prices.
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Beijing's zero covid policies add to the greenback's safe-haven appeal
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At this point in time, any loosening is limited and uncertainty boosts the safe-haven dollar. Moreover, lower output by China's factories is adding to supply-chain issues and boosting inflation – fueling the Fed's tightening cycle. While there is no change in Beijing's policies, the dollar would likely remain bid.
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The broad trend is already risk-off, boosting the greenback .
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Canadian consumer and private sector are both largely unable to shoulder higher costs .
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Fitch took away Canada's AAA rating yesterday, citing the pandemic-inspired increase in the country's deficit and debt.
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Investors now look forward to important US macro data for short-term trading opportunities.
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On Thursday, two of the Federal Reserve's most policymakers pushed back against market expectations for a 100 bps rate hike later this month. This led to a further decline in the US Treasury bond yields, which, in turn, acted as a headwind for the USD and exerted some downward pressure on the USD/CAD pair.
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Therefore, the USD/CAD first support will be 1.3000. A break below will send the pair sliding towards July 13 low at 1.2936, followed by a push lower to the 50-day moving average (DMA) at 1.2862.