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USDCAD SIGNAL 21-06-2022 : USDCAD drops to 1.2900 neighbourhood amid rising oil prices, softer USD

USDCAD SIGNAL

USDCAD SIGNAL : USDCAD drops to 1.2900 neighbourhood amid rising oil prices, softer USD

  • A combination of factors dragged USD/CAD lower for the second straight day on Tuesday.
  • Rising oil prices underpinned the loonie and exerted pressure amid modest USD weakness.
  • Hawkish Fed expectations should limit deeper USD losses and extend support to the major.

USDCAD SIGNAL : The USD/CAD pair extended its retracement slide from the YTD peak, around the 1.3075-1.3080 area set on Friday and witnessed some follow-through selling for the second successive day on Tuesday. The downward trajectory dragged spot prices to a three-day low, closer to the 1.2900 mark during the early European session and was sponsored by a combination of factors.

Crude oil prices gained some positive traction and built on the overnight bounce from the vicinity of a one-month low amid worries about tightening global supplies, which benefitted the commodity-linked loonie. On the other hand, a generally positive tone around the equity markets undermined the safe-haven US dollar and exerted downward pressure on the USD/CAD pair.

That said, growing market concerns about slowing global economic growth and fuel demand could act as a headwind for crude oil prices. Furthermore, expectations that the Fed would tighten its monetary policy at a faster pace to curb soaring inflation could lend support to the USD. This should help limit deeper losses for the USD/CAD pair, warranting caution for bears.

USDCAD SIGNAL : The markets seem convinced that the US central bank would stick to its aggressive policy tightening path and have been pricing in another 75 bps rate hike at the next FOMC meeting in July. The bets were reinforced by a fresh leg up in the US Treasury bond yields, which supports prospects for the emergence of USD dip-buying and should lend support to the USD/CAD pair.

Hence, it would be prudent to wait for strong follow-through selling before confirming a near-term top for the USD/CAD pair and positioning for any meaningful corrective slide. Traders now look forward to the release of Canadian monthly Retail Sales figures, which, along with Existing Home Sales data from the US, might provide some impetus to the USD/CAD pair.

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FIRST CAPITALS brand is authorized and regulated in various jurisdictions.

First Capitals Limited (www.First Capitals.com/eu) is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 46614. The company is also registered with the Financial Conduct Authority of the UK with number 600475.

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Card transactions are processed via FT Global Services Ltd, Reg No. HE 335426 and registered address at Ioannis Stylianou, 6, Floor 2, Flat 202 2003, Nicosia, Cyprus, and via Exinity Services Ltd , Reg No. HE 400404 and registered address at Agiou Georgiou Makri, 64, Anna Maria Lena Court, Flat 201, 6037, Larnaca, Cyprus. Address for cardholder correspondence: backoffice@First Capitals.com.. Business location address: FIRST CAPITALS Tower, 35 Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus.

Exinity Limited is a member of Financial Commission, an international organization engaged in a resolution of disputes within the financial services industry in the Forex market.

Risk Warning: Trading Forex and Leveraged Financial Instruments involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Trading non-leveraged products such as stocks also involves risk as the value of a stock can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FIRST CAPITALS brand based on the legal requirements in his/her country of residence.  Please read FIRST CAPITALS’s full Risk Disclosure.

Regional restrictions: FIRST CAPITALS brand does not provide services to residents of the USA, Mauritius, Japan, Canada, Haiti, Suriname, the Democratic Republic of Korea, Puerto Rico, Brazil, the Occupied Area of Cyprus and Hong Kong. Find out more in the Regulations section of our FAQs.

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