Will USD/CAD remain at 1.3200?
June 18, 2023 12:22 pmVideo
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USD/CAD entered a phase of bearish consolidation on Friday, trading at its lowest level since September 2022. Although the spot price managed to remain above 1.3200 at the beginning of the European, any recovery seems unattainable.
The reason lies in dollar, which receives support from a slight intraday increase in Treasury bond yields. This, in turn, pushes USD/CAD up.
The hawkish forecast of the Fed, suggesting a likely 0.50% increase in borrowing costs, also serves as a tailwind for US bond yields and dollar. However, the underwhelming macroeconomic data released on Thursday raised questions about the prospects of further rate hikes.
Meanwhile, the Canadian dollar (CAD) unexpectedly received support from the Bank of Canada (BoC) after it raised interest rates by 25 basis points last week. This, coupled with a strong recovery in oil prices, fueled demand for CAD, limiting the upside potential of the pair.
Market players should pay attention to statements made by Fed members, as well as the preliminary release of the US Michigan’s consumer sentiment index. Data on US bond yields may also stimulate dollar demand.
Oil prices could create short-term trading opportunities for CAD.
The material has been provided by InstaForex Company – www.instaforex.com
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