USD / CAD - Canadian Dollar Sinks With Oil| MENAFN.COM

Friday, 19 August 2022 04:45 GMT

USD / CAD - Canadian Dollar Sinks With Oil

(MENAFN- USD / CAD - Canadian Dollar Sinks With Oil

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- WTI oil prices add to this week's losses
- Western and Chinese diplomats take turns being scolded
- US dollar firms except against safe-haven currencies
USDCAD Snapshot open 1.2885-89, overnight range 1.2865-1.2887 close 1.2864, WTI oil $88.72, Gold $1786.64
The Canadian dollar probed rally ended abruptly yesterday morning after a wave of negative risk sentiment washed over markets and oil prices sank.
USDCAD traded at 1.2820 at the start of Thursday's NY session, rallied to 1.2875 at the 10:00 am option expiry window, the drifted in a 1.2840-1.2870 until the close. USDCAD resumed its upward trajectory in Asia then accelerated higher in Europe, coinciding with sliding oil prices.
West Texas Intermediate (WTI) oil peaked at $101.75/barrel last Friday and it touched $87.72/b in early NY trading. Traders fear sharply reduced demand due of a US recession triggered by Fed rate hikes to combat inflation. Increased Opec and Libya production and high US crude inventories also weighs on prices.
Oil prices have fully erased the gains following Russia's invasion of Ukraine, which seems a tad premature as sanctions on Russian oil are still in effect and won't go away any time soon.
Canadian dollar traders are also awaiting the release of the domestic Labour Force Survey (LFS). Canada is expected to have gained 20,000 jobs in July compared to the loss of 43,000 in June. The unemployment rate is expected at 5.0% compared to 4.9% in June. However, the Canadian results will be lost in the noise from the US nonfarm payrolls data
US Nonfarm payrolls are expected to rise by 250,000 jobs and for average hourly earnings to rise 0.3% m/m, the same as in June.
Today's data takes on a heightened sense of importance because Fed Chair Jerome Powell said the Fed was 'data dependent.' Traders seem to have forgotten that the Fed is always data dependent. They exist to formulate monetary policy based on the outlook for inflation and employment based on economic data inputs.
Regardless, one school of thought is that a weak NFP number will be a sign that the economy is slowing which suggests the Fed will be less inclined to raise rates aggressively. However, today's results will be quickly forgotten next week as traders look ahead to the next inflation report.
EURUSD consolidated yesterday's gains in a 1.0219-1.0253 range, supported by EURGBP demand. EURUSD gains are limited due to elevated recession risks and the war in Ukraine,
GBPUSD trades with a negative bias in a 1.2127-1.2168 range following yesterday's dovish Bank of England rate hike.
USDJPY bounced in a 132.53-1.3347 range supported by firmer US Treasury yields but gains capped by safe-haven demand due to China's belligerence over Taiwan.
AUDUSD and NZDUSD traded narrowly inside recent ranges ahead of the NFP report.

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