USD/CAD struggles near mid-1.3300s, seems vulnerable ahead of US PMIs – by hareshmenghani USDCAD Fed Bonds BOC Currencies
aced around mid-1.3300s, just a few pips above a one-week low touched on Monday and seems vulnerable to slide further.
Despite a softer risk tone, the safe-haven US Dollar struggles to capitalize on its modest intraday recovery from a nine-month low and acts as a headwind for the USD/CAD pair. Growing acceptance that thewill soften its hawkish stance amid signs of easing inflationary pressure turns out to be a key factor that continues to weigh on the greenback.
In fact, the markets have been pricing in a greater chance of a smaller 25 bps Fed rate hike move in February. This, along with softer US Treasury bond yields, keeps the USD bulls on the defensive. Apart from this, the recent rally in crudeprices to over a one-month top underpins the commodity-linked Loonie and exerts pressure on the USD/CAD pair.
The aforementioned fundamental backdrop favours bearish traders and supports prospects for an extension of the USD/CAD pair's recent downward trajectory. Even from a technical perspective, last week's failure to find acceptance above the 100-day SMA validates the negativeTraders, however, seem reluctant to place aggressive bets and prefer to move to the sidelines ahead of this week's key central bank event/data risk.
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