Monday, May 29, 2023
HomeUncategorizedUSD/CAD bulls hover around 1.2900 amid stronger DXY, weaker oil prices, Canadian...

USD/CAD bulls hover around 1.2900 amid stronger DXY, weaker oil prices, Canadian inflation focus

  • USD/CAD hovers near weekly highs after posting its biggest one-day gain in a month.
  • Economic concerns surrounding China, rising oil production in the Permian favors WTI bears.
  • Risk aversion also supports a bullish bias ahead of key data/events.

USD/CAD bulls take a breather near 1.2900, It was the longest one-day gain in a month as traders awaited key inflation data from Canada. In addition to pre-data anxiety, cautious sentiment in the market and subdued prices for WTI crude, Canada’s main export commodity, also polled Canadian dollar currency pair buyers during Tuesday’s Asian session.

WTI crude stays on the sidelines near 6-month lows, pausing two-day downtrend as bears look for fresh clues to continue the recent southward move. Even so, black gold remains weak amid talk of a weakening economy in China, the world’s top consumer of the commodity, and rising production in the Permian Basin. “Oil production in the Permian, the largest U.S. shale oil basin, in Texas and New Mexico, will rise by 79,000 bpd in September to a record 5.408 million bpd, the U.S. Energy Information Administration (EIA) said in its report. said in the report. Monday productivity report,” according to Reuters.

Elsewhere, retail sales in China fell 2.7% y/y in July, ahead of expectations of 5.0% and 3.1% % respectively, while Industrial production (IP) edged down to 3.8% in the month from 3.9% previously and the consensus forecast of 4.6%. In addition, the People’s Bank of China (PBOC) surprised the market on Monday by cutting the one-year Medium-Term Lending Facility (MLF) rate by 10 basis points (bps) and trying to repel the bears.

Headlines about improving coronavirus conditions in China’s financial hub Shanghai and Russian bonds resuming trading on Wall Street should have been risk-friendly Preference, but can’t. Also, as the Wall Street Journal (WSJ) hinted, hopes of a possible meeting between U.S. President Joe Biden and Chinese President Xi Jinping could favor risk-on sentiment. On the same line, Chinese President Xi Jinping made comments about more efforts to revive the world’s second-largest economy.

Fed policymakers remain hawkish despite recent disappointing U.S. data, while hinting that more evidence is needed Inflation softened. The latest addition to the Fed is Richmond Fed President Thomas Barkin, who has said he wants to raise interest rates further to keep inflation in check. “I would like to see a period of sustained inflation under control, and until we do that, I think we’re going to have to push rates into restrictive territory,” Barkin told CNBC, according to Reuters.

That is to say, the manufacturing index of New York State in the United States rose from 11.1 in July and the market forecast of 8.5 to 8.5 in August. 31.3, fueling fears of an economic slowdown. Likewise, the NAHB Homebuilder Confidence Index in the U.S. fell from 55 to 49 in August, the lowest level since the first few months of 2020.

While mapping market sentiment, the U.S. 10-year Treasury yield fell 6 basis points (bps) to 2.79%, while Wall Street It closed with modest gains. Notably, at press time, S&P 500 futures had retreated from three-month highs, posting small losses.

Looking ahead, the headlines around China could be a catalyst for the dollar ahead of the July release of the Canadian Consumer Price Index (CPI) /CAD traders rejoice. What’s more important to track is the Bank of Canada (BOC) core CPI, which is expected to increase by 6.7% year over year, compared to 6.2% previously.

technical analysis

successfully broke above the resistance line a month ago and now supports around 1.2880, pointing to USD/CAD buyers heading towards the monthly peak of 1.2985.

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