Market news

24 November 2022

USD/CAD juggles above 1.3330 amid quiet market mood, oil stabilizes around $78.00

  • USD/CAD is struggling around the immediate hurdle of 1.3340 amid an absence of a potential trigger.
  • The market mood has turned quiet as the United States economy is celebrating Thanksgiving Day.
  • A decline in oil prices led by rising Covid-19 infections in China has impacted the Canadian Dollar.

The USD/CAD pair is displaying topsy-turvy moves just like another typical Friday session. The Lonnie asset is struggling around 1.3340 after witnessing a recovery move from below 1.3320. A bullish reversal cannot be claimed yet as it passes through various filters. No doubt, the trading activity is low on account of Thanksgiving Day but the market mood is still solid.

The USD Index (DXY) is auctioning like a dead cat amid the unavailability of any potential trigger ahead due to the light economic calendar. However, the hangover of less-hawkish commentary from Federal Open Market Committee (FOMC) minutes will continue to impact US Dollar ahead. Meanwhile, the 10-year US Treasury yields have dropped below 3.69%.

The long-term US yields are expected to remain on the tenterhooks as the Federal Reserve (Fed) is expected to shift to a lower interest rate hike for its December monetary policy meeting. Commentary from Fed policymakers as per FOMC minutes indicate that financial risks in the United States economy are accelerating led by extreme policy tightening.

Therefore, a slowdown in the rate hike pace would reduce those risks and would also present an opportunity to observe the impact of efforts made by the Fed to bring down inflationary pressures.

On the Canadian Dollar front, investors are awaiting the release of the Gross Domestic Product (GDP) for the third quarter, which will release on Tuesday. On a quarterly basis, the GDP data is expected to decline to 0.4% from the prior release of 0.8%. This might be delightful for the Bank of Canada (BOC) as a slowdown in the economy is necessary to cool down the ultra-hot inflation.

Meanwhile, oil prices have stabilized around the critical hurdle of $78.00 after a perpendicular downfall. This doesn’t present a reversal situation but an inventory distribution that could lead to further weakness. Rising infections of Covid-19 in China have resulted in a significant decline in economic projections. It is worth noting that Canada is a leading exporter of oil to the United States and a decline in oil prices is impacting the Canadian Dollar.

 

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