USD/CAD Sticks To Modest Gains Above 1.3800 Mark, Lacks Bullish Conviction


 Photo by Michelle Spollen on Unsplash

  • USD/CAD regains positive traction amid the emergence of some USD dip-buying.
  • The Fed’s dovish stance drags the US bond yields lower and should cap the USD.
  • A positive risk tone and the overnight rally in Oil prices warrant caution for bulls.
  • The USD/CAD pair attracts some dip-buyers on Thursday and moves away from a one-week trough, around the 1.3785 region touched the previous day. Spot prices currently trade around the 1.3815-1.3820 zone and seem to draw support from a goodish pickup in the US Dollar (USD) demand. The USD Index (DXY), which tracks the Greenback against a basket of currencies, rebounds from the vicinity of a three-week low touched in the aftermath of the FOMC policy decision on Wednesday. The upside for the USD, however, seems limited in the wake of the Federal Reserve’s (Fed) dovish outlook, signaling the likelihood of an early rate cut if inflation stays in line with expectations.In fact, the US central bank acknowledged the recent progress on inflation and cooling in the labor market, opening the door for an imminent start of the rate-cutting cycle in September. This, in turn, drags the US Treasury bond yields to a multi-month low, which, along with a generally positive risk tone should cap gains for the safe-haven buck and act as a headwind for the USD/CAD pair. Meanwhile, Crude Oil prices consolidate the previous day’s strong gains amid the risk of a further escalation of tensions in the Middle East, which continues to fuel worries about supply disruptions from the key Oil producing region. This, in turn, could underpin the commodity-linked Loonie and contribute to capping the upside for the USD/CAD pair, warranting some caution for bullish traders. There isn’t any relevant market-moving economic data due for release on Thursday, either from the US or Canada, leaving spot prices at the mercy of the USD and Oil price dynamics. The focus, meanwhile, remains glued to the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, due on Friday.More By This Author:EUR/JPY Slumps To Multi-month Lows Below 163.00 On Hawkish BoJ Action XAG/USD Bulls Now Await Sustained Breakout Through 100-Day SMA Gold Price Holds Above $2,400 Mark, Looks To Fed For More Cues On Interest Rates

    Reviews

    • Total Score 0%
    User rating: 0.00% ( 0
    votes )



    Leave a Reply

    Your email address will not be published. Required fields are marked *