USD/CAD remains depressed amid uptick in oil prices, holds above 1.3400 mark – by hareshmenghani USDCAD China Fed RiskAppetite Currencies
An uptick in crude oil prices underpins the Loonie and caps the upside amid a softer USD.USD/CAD
pair attracts some sellers in the vicinity of mid-1.3400s on Wednesday and erodes a part of the previous day's recovery gains. Spot prices remain on the defensive through the first half of the European session, though manage to hold above the 1.3400 round-figure mark. A modest uptick in crude oil prices underpins the commodity-linked Loonie and is seen as a key factor acting as a headwind for the USD/CAD pair. China's biggest pivot away from its strict zero-COVID policy raises hopes for a sharp recovery in fuel demand and acts as a tailwind for the black liquid. That said, worries about a deeper global economic downturn might keep a lid on any meaningful gains for oil prices.
The US Dollar, on the other hand, is weighed down by a fresh leg down in the US Treasury bond yields amid growing acceptance that thewill soften its policy stance. Data released from the US last week indicated that the effect of the Fed's large rate hikes in 2022 is being felt in the economy. This, in turn, lifts bets for smaller Fed rate hikes going forward and keeps the US bond yields depressed near a multi-week low.
Apart from this, a generally positive tone around the equity markets is seen denting the greenback's relative safe-haven status. Traders, however, seem reluctant to place aggressive bets around the USD/CAD pair and prefer to wait on the sidelines ahead of the US consumer inflation figures, due for release on Thursday.
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