USD/CAD climbs to its highest since June 2020 amid sliding oil prices, stronger USD – by hareshmenghani USDCAD Recession Fed Bonds Currencies
he highest level since June 2020, around the 1.3640 area during the early European session and is sponsored by a combination of factors.
Crude oil prices kick off the new week on a downbeat note and hit a fresh multi-month low amid worries that a deeper global economic downturn will hurt fuel demand. This, in turn, is seen undermining the commodity-linked loonie, which, along with relentless US dollar buying, continues to boost the USD/CAD pair.
The Fed last week delivered another supersized rate hike, as was widely anticipated, and signalled that it will likely undertake more aggressive increases at its upcoming meetings to cap inflation. The hawkishremains supportive of elevated US Treasury bond yields and continues to lend support to the buck.
In fact, the yield on the rate-sensitive 2-year US government bond stands tall near a 15-year high and the benchmark 10-year Treasury hits its highest in 11 years. Apart from this, the prevalent risk-off environment is seen as another factor benefitting the safe-haven greenback and lending support to the USD/CAD pair.remains fragile amid recession fears, which, along with geopolitical risk, take its toll on the global risk sentiment.
Market participants now look forward to speeches by influential FOMC members - Boston Fed President Susan Collins,and Dallas Fed President Lorie Logan. This, along with the US bond yields and the broader risk sentiment, might influence the USD and provide some impetus to the USD/CAD pair. Traders will further take cues from oil price dynamics to grab short-term opportunities.
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