Market news

23 June 2022

USD/CAD retreats to mid-1.2900s amid modest bounce in oil prices, downside seems cushioned

  • USD/CAD gained some positive traction on Thursday, though lacked strong follow-through buying.
  • Bets for a 75bps BoC rate hike, rebounding oil prices underpinned the loonie and acted as a headwind.
  • Hawkish Fed expectations continued lending support to the USD and should help limit the downside.

The USD/CAD pair attracted some buying on Thursday, albeit struggled to capitalize on the move and the uptick faltered near the 1.2985 region. The pair now surrendered a major part of its intraday gains and was seen trading in neutral territory, just above mid-1.2900s during the early European session.

The Canadian dollar drew support from hotter-than-expected domestic consumer inflation figures released on Wednesday, which lifted bets for a 75 bps rate hike move by the Bank of Canada in July. Apart from this, a modest recovery in crude oil prices underpinned the commodity-linked loonie and acted as a headwind for the USD/CAD pair amid subdued US dollar price action.

The downside, however, seems cushioned, at least for the time being, amid expectations that the Fed would retain its aggressive policy tightening path and again hike rates by 75 bps in July. Fed Chair Jerome Powell, during his testimony before the Senate Banking Committee, reaffirmed market expectations and said that the ongoing rate increases will be appropriate.

Powell added that Fed is strongly committed to bringing inflation back down and the pace of future rate increases will continue to depend on incoming data. Apart from this, the prevalent caution mood, amid growing concerns over a possible recession, offered some support to the safe-haven greenback. This, in turn, should limit any meaningful slide for the USD/CAD pair.

Market participants now look forward to the US economic docket, featuring the release of the usual Weekly Initial Jobless Claims and flash PMI prints. Apart from this, Fed Chair Jerome Powell's second day of testimony might influence the USD. Traders will further take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair.

Technical levels to watch

 

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location