After Monday’s recovery failed to materialize, the USD/CAD reverts to an intraday low.
After solid Canadian jobs, a new appointment at BOC and a bullish WTI kept bearish encouraged.
Risk catalysts, such as the US CPI, are being watched for intermediate changes.
In early Tuesday, the USD/CAD failed to extend its week-start recovery, falling 0.07 percent to 1.2445. As a result, the Loonie pair validates the market’s confidence following the Bank of Canada’s (BOC) monetary policy meeting on Wednesday, despite positive fundamentals.
Price pressures and WTI strength might be seen as one of the positives that led BOC to lead the Western central banks toward tapering. “Plunging Canadian immigration during the epidemic threatens to fuel more sustained inflation pressures than the Bank of Canada is predicting,” according to a recent Reuters study, “with statistics already showing signs of developing worker shortages that might push wages higher when the economy reopens.”
On the other hand, despite the covid Delta variation, the economic recovery gets traction and supports energy consumption. The same is adding to OPEC+’s indecision to keep oil prices near their highest level since October 2018, up 0.12 percent intraday at $73.70 at press time.
A solid Canadian jobs data for June, as well as the nomination of Carolyn Rogers as the BOC’s new Senior Deputy Governor, lead to more tapering on Wednesday.
It’s worth mentioning that White House officials are also talking about cross-border limitations with Canada and other Western countries, all the while remaining cautious about the coronavirus (COVID-19) and its strains.
In the midst of these maneuvers, market sentiment remains slow, with the S&P 500 Futures hitting a new high, despite being mildly offered recently, and the US 10-year Treasury yield rising for the third day in a row to 1.373 percent by press time.
Covid headlines may delight USD/CAD traders given the lack of important data ahead of the US session. On Tuesday, however, the US CPI will be closely watched, as an increase in inflation statistics would reignite reflation fears and put a safe-haven bid under the Loonie. Nothing becomes more essential than the BOC’s projected policy tightening, it’s worth emphasizing.
Read this article: USD/CAD Weekly Forecast: Is Canada’s currency a one-trick pony?
Although failure to break through the 1.2600 barrier weighs on USD/CAD values, the 1.2400 barrier, which includes the 100-day EMA and an ascending support line from June 09, becomes a tough nut for the bulls to crack./n
