USD / CAD - Canadian Dollar Weakens With Commodities| MENAFN.COM

Tuesday, 16 August 2022 01:06 GMT

USD / CAD - Canadian Dollar Weakens With Commodities

(MENAFN- USD / CAD - Canadian Dollar Weakens with Commodities

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- Recession fears sink commodity prices
- FOMC minutes due this afternoon
- US dollar consolidating yesterday's gains
USDCAD Snapshot open 1.3037-41, overnight range 1.3014-1.3063, close 1.3030, WTI oil $100.19, Gold $1764.10
The Canadian dollar is under stress. A wave of recession fears rippled through markets yesterday, sparking safe-haven demand for US dollars while knocking commodity prices for a loop.
Bond traders fear a US recession is imminent and don't believe that the Fed has any hope of engineering a soft-landing. They sold bonds which drove the US 10-year Treasury yield down to 2.79% from 2.98% yesterday. The 10-year yield traded sideways around 2.81% overnight.
Plunging Treasury yields due to recession fears fueled a free-fall in oil prices. West Texas Intermediate (WTI) fell 12.2% on Tuesday and then spent the overnight session consolidating in a $99.13/barrel-$102.11 /b range.
The oil price plunge appears overdone, especially considering that all the factors that drove prices north of $12.0/b in June are still in place. Opec says they are increasing production, but the cartel has failed to achieve previous production increase levels. The sanctions against Russian oil aren't going anywhere, and Libya's political uncertainty is hampering production in that country.
Meanwhile, China continues to ease its way out of Covid restrictions, supporting demand.
USDCAD rallied from 1.2842 to 1.3078 on Tuesday, then consolidated those gains in a 1.3014-1.3063 range overnight. The short term technical picture supports a higher USDCAD, but there is significant resistance in the 1.3080 area. A failure to break above the top, followed by a drop below 1.2950, suggests further 1.2840-1.3080 consolidation.
The minutes from the FOMC meeting of June 15 are released today. Traders will study them for clues about the Committee's views on recession risks.
EURUSD is under pressure.
Prices fell from 1.0450 Tuesday and hit 1.0187 in NY trading today. Prices are weighed down by rising fears of a severe Eurozone recession due to the Russia and Ukraine war, which suggests ECB rates cannot rise very high. The EURUSD technicals are targeting 1.000.
GBPUSD is at the bottom of its 1.1892-1.1988 range due to UK political turmoil and the Bank of England's negative economic outlook. The GBPUSD technicals are bearish and target 1.1500.
USDJPY traded with a negative bias in a 135.03-135.87 range thanks to safe-have demand for yen and lower Treasury yields.
AUDUSD and NZDUSD are suffering from weaker commodity prices and negative risk sentiment.
Today's US data includes ISM Services PMI for June and the JOLTS job openings survey.

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