USD / CAD Pairs Post BOC Losses Below 1.2400 On Low Oil Prices Before US GDP
- The USD / CAD consolidates the biggest daily one-week losses and has been skyrocketing lately.
- Oil prices carry the burden of growth fears, the DXY does not justify firmer Treasury yields.
- BOC surprised the markets with the end of bond buying, with US GDP in sight.
USD / CAD hit an intraday high around 1.2375, up 0.18% on a day as it licks injuries from the Bank of Canada (BOC) ahead of Thursday’s European session. Lower prices for Canada’s biggest export, WTI crude oil, could also add to the loonie’s recent strength.
WTI crude oil drops for the second day in a row to refresh the fortnight’s low, down 1.06% to around $ 80.70 at press time. Black gold remains under pressure for second day in a row as global traders fear monetary policy tightening in the West as not all pandemic losses are defined.
Hopes of the US stimulus and Fed tantrums could also be the basis for the USD / CAD rise. White House policymakers are pushing for faster progress on the stimulus, and budget talks favor optimists as escalating U.S.-China feuds over telecommunications, Taiwan and Afghanistan weigh on sentiment. The cautious mood ahead of the preliminary reading of US Q3 GDP is also a challenge for the mood, which should confirm that the world’s largest economy has suffered from the Delta Variant breakdown and that it is not. So now is not the right time for the Fed’s rate hikes.
It should be noted that the BOC left the benchmark policy rate unchanged at 0.25%, corresponding to the general market forecast. However, the end of weekly government bond purchases by the Canadian central bank surprised the markets. Gov. Tiff Macklem’s comments, which also boosted the Canadian dollar (CAD), said: “We will consider hike rates sooner than we previously thought.
Amid those games, US Treasury yields consolidate the biggest daily drop since mid-August, recently bumping up offers to 1.55%, up 2.6 basis points (bps), while contracts Stock futures show slight gains at the latest.
While mixed concerns highlight oil moves as the key catalyst for the immediate performance of the USD / CAD, US third quarter GDP will be crucial to watch.
Read: Snapshot of US GDP in Q3: A most uncertain estimate
The 100-SMA on the four-hour (4H) chart and the top line of a seven-week-old descending wedge, around 1.2430, becomes the main short-term obstacle that USD / CAD traders should watch out for when trading. new recovery movements.