The USD/CAD pair continues its downward drift for the second consecutive day, reaching a two-week low on Wednesday. The Loonie gains support from bullish oil prices, while the prevailing selling bias towards the USD adds pressure to the pair. Traders now shift their attention to the key US CPI report and the Bank of Canada's (BoC) decision, eagerly awaiting fresh signals for the pair's next direction.
During the Asian session, the USD/CAD pair extends its decline, marking the third negative day out of the past four. It falls to around the 1.3200 level, hitting a two-week low. This downward movement can be attributed to a combination of factors. Notably, the announcement of supply cuts by Saudi Arabia and Russia, the world's largest oil exporters, continues to bolster the Loonie, which is linked to commodity prices. Furthermore, the ongoing selling pressure on the US Dollar contributes to the overall bearish sentiment surrounding the USD/CAD pair. The USD Index (DXY), which measures the Greenback against a basket of currencies, drops to a fresh two-month low amid speculation that the Federal Reserve (Fed) may be nearing the end of its current rate-hiking cycle.
Investors are increasingly convinced that the Fed has limited room to further tighten monetary policy. This sentiment is reinforced by the New York Fed's monthly survey, which revealed that consumer inflation expectations for the next year have reached their lowest level since April 2021. As a result, market focus shifts to the release of the latest US consumer inflation figures scheduled for later in the early North American session. The crucial US CPI report is expected to shape expectations regarding the Fed's future rate-hike trajectory, thus impacting the demand for the USD in the near term and potentially providing a significant boost to the USD/CAD pair.
In addition to the US CPI report, market participants will closely follow the monetary policy decision of the Bank of Canada (BoC) on Wednesday. Strong indicators from the domestic CPI report and significant job growth in June have raised expectations of a 25 basis point interest rate hike by the Canadian central bank. Traders will closely scrutinize BoC Governor Tiff Macklem's remarks during the post-meeting press conference, as they could inject volatility into the Canadian Dollar (CAD) and help determine the near-term trajectory of the USD/CAD pair.
Pivot Point : 1.3245
Preferred scenario Scenario
Short positions below 1.3245 with targets at 1.3175 & 1.3150 in extension.
Alternative Scenario
Above 1.3245 look for further upside with 1.3265 & 1.3285 as targets.
During the Asian session, the USD/CAD pair extends its decline, marking the third negative day out of the past four. It falls to around the 1.3200 level, hitting a two-week low. This downward movement can be attributed to a combination of factors. Notably, the announcement of supply cuts by Saudi Arabia and Russia, the world's largest oil exporters, continues to bolster the Loonie, which is linked to commodity prices. Furthermore, the ongoing selling pressure on the US Dollar contributes to the overall bearish sentiment surrounding the USD/CAD pair. The USD Index (DXY), which measures the Greenback against a basket of currencies, drops to a fresh two-month low amid speculation that the Federal Reserve (Fed) may be nearing the end of its current rate-hiking cycle.
Investors are increasingly convinced that the Fed has limited room to further tighten monetary policy. This sentiment is reinforced by the New York Fed's monthly survey, which revealed that consumer inflation expectations for the next year have reached their lowest level since April 2021. As a result, market focus shifts to the release of the latest US consumer inflation figures scheduled for later in the early North American session. The crucial US CPI report is expected to shape expectations regarding the Fed's future rate-hike trajectory, thus impacting the demand for the USD in the near term and potentially providing a significant boost to the USD/CAD pair.
In addition to the US CPI report, market participants will closely follow the monetary policy decision of the Bank of Canada (BoC) on Wednesday. Strong indicators from the domestic CPI report and significant job growth in June have raised expectations of a 25 basis point interest rate hike by the Canadian central bank. Traders will closely scrutinize BoC Governor Tiff Macklem's remarks during the post-meeting press conference, as they could inject volatility into the Canadian Dollar (CAD) and help determine the near-term trajectory of the USD/CAD pair.
Pivot Point : 1.3245
Preferred scenario Scenario
Short positions below 1.3245 with targets at 1.3175 & 1.3150 in extension.
Alternative Scenario
Above 1.3245 look for further upside with 1.3265 & 1.3285 as targets.
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