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Canadian Dollar picks up as lower US yields weigh on the USD – Crypto News
- Canadian Dollar advances moderately favoured by a softer US Dollar.
- USD/CAD is pulling back despite the Fed’s hawkish stance and lower oil prices.
- Current Canadian Dollar recovery is likely to be short-lived.
The Canadian Dollar (CAD) is trading higher on Wednesday to snap a five-day sell-off that has sent the Loonie 1.7% lower. The US Dollar is losing ground across the board, as US yields retreat from year-to-date highs. This is giving some respite to a battered CAD, which has been struggling under an adverse fundamental background.
In the current background, however, the Canadian Dollar’s upside attempts are likely to be short-lived. The “higher for longer” Federal Reserve (Fed) stance, in opposition to the Bank of Canada’s (BoC) dovish outlook, is expected to underpin the US Dollar. Beyond that, the sharp reversal in Oil prices, Canada’s main export, is an extra weight for the commodity-linked Loonie.
On Wednesday, the release of the Fed’s beige book and speeches from Fed members Mester and Bowman are the only events worth mentioning. After Tuesday’s speech by Fed Chair Jerome Powell, their impact on the pair is limited.
Daily digest market movers: USD/CAD loses steam at five-month highs
- Canadian Dollar is trading 0.2% higher on Wednesday after having lost nearly 2% in a five-day sell-off.
- The hawkish Fed stance, confirmed on Wednesday by Fed Chair Powell, and the dovish outlook of the BoC, which is expected to start cutting rates in June, are acting as a headwind for the CAD.
- On Wednesday, Fed Chair Powell warned about the lack of progress on inflation, suggesting that the bank will have to keep rates at restrictive levels for a longer time.
- Bets for a Fed rate cut in July have dropped to 37% from 50% at the beginning of the week. Investors are now pricing in 40 bps of cuts in 2024, down from 150 BP in January.
- EIA Crude Oil stocks have increased by 2.735 million barrels. against expectations of 1.65 million. Incrementally, this is weighing further on Crude prices and also on the CAD.
- On Tuesday, Canadian inflation data showed mixed figures. Headline CPI accelerated to a 2.9% yearly rate from 2.8% in the previous month. The Core CPI eased to 2%, its lowest level in three years.
- These figures endorse the view that the Bank of Canada will be able to cut rates soon, probably in June, and increase negative pressure on the pair.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.33% | -0.06% | -0.20% | -0.25% | -0.21% | -0.26% | -0.20% | |
| EUR | 0.33% | 0.27% | 0.13% | 0.09% | 0.10% | 0.06% | 0.12% | |
| GBP | 0.05% | -0.27% | -0.14% | -0.14% | -0.16% | -0.21% | -0.16% | |
| CAD | 0.21% | -0.12% | 0.16% | -0.03% | -0.01% | -0.04% | -0.03% | |
| AUD | 0.23% | -0.09% | 0.19% | 0.03% | 0.00% | -0.03% | 0.03% | |
| JPY | 0.21% | -0.13% | 0.14% | 0.04% | -0.02% | -0.07% | 0.01% | |
| NZD | 0.27% | -0.08% | 0.19% | 0.04% | 0.02% | 0.04% | 0.04% | |
| CHF | 0.22% | -0.12% | 0.15% | 0.00% | -0.04% | -0.01% | -0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical analysis: USD/CAD in corrective pullback with 1.3785 holding bears for now
The broader US Dollar trend remains intact, although the pair is going through a corrective pullback from overbought levels, following a five-day rally.
Bears are expected to be challenged at 1.3785, ahead of the intra-week low at 1.3728. The 38.2% Fibonacci retracement level of April’s rally is at 1.3705. On the upside, the immediate resistance is at 1.3845. Further up, the next target would be November 2023 high at 1.3900.
USD/CAD 4-Hour Chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
