USD/CAD - Canadian Dollar Losing Traction| MENAFN.COM

Monday, 04 July 2022 03:07 GMT

USD/CAD - Canadian Dollar Losing Traction

(MENAFN- USD/CAD - Canadian Dollar Losing Traction

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- China trims interest rates, modestly
- Wall Street futures trading higher
- US dollar opens mixed; AUD outperforms
USDCAD Snapshot: Open 1.2494-98, Overnight Range-1.2483-1.2515, previous close 1.2516, WTI open $86.73, Gold open $1837.10
The Canadian dollar is losing traction as it tries to extend gains through significant resistance levels. Yesterday's domestic inflation data failed to give the currency a boost. December CPI was 4.8% y/y, rising at the fastest pace in thirty years. However, many traders were positioned for a result of 5.0%, and when it didn't happen, scrambled to unwind trades. The Canadian dollar sank but quickly found a
bottom after oil prices surged.
West Texas Intermediate (WTI) jumped to $87.80/barrel from $85.80 after Opec released its Monthly Oil Report noting,“The oil market is expected to remain well-supported throughout 2022.”
The cartel expects 2022 world oil demand will rise by 4.2 million barrels per day which is unchanged from the previous report. They didn't seem concerned about the impact on Omicron on demand.
Opec is not worried that rising interest rate would derail demand or global growth. They said,“Monetary actions are not expected to hinder underlying global economic growth momentum, but rather serve to recalibrate otherwise overheating economies.”
However, oil prices drifted lower overnight due to profit-taking and concerns WTI was becoming overbought in the short term.
Canadian dollar price action continues to be driven by Wall Street and bonds. The 10-year US Treasury yield touched 1.90% on Wednesday, sending the Dow Jones Industrial Average and the S&P 500 indexes tumbling.
Equity markets found support overnight, starting in Asia after the Peoples Bank of China (PBoC) cut its 1-year and 5-year Prime Lending rates. The 1-year rate is now 3.7% from 3.8% while the 5-year is 4.65% from 4.70%.
The rate cuts were hardly aggressive, but they still managed to give the Hong Kong Hang Seng Index a lift. It gained 3.4%, and other Asia equity indexes rose as well.
The Australian dollar was the best performing G-10 currency overnight while the New Zealand Dollar was the worst. The Australian employment report was robust, recording the lowest unemployment rate (4.2%) since 2008 and gaining 64,800 jobs.
EURUSD and GBPUSD were rangebound ahead of today's US data.
US weekly jobless claims (forecast 220,000), Philadelphia Fed Manufacturing Survey (forecast 19.8 vs previous 15.4), and Existing Home Sales data are ahead.

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