USD/CAD Pullback From Peak, Oil Prices Underpin Loonie
After a good sized pullback from the high 1.24s, USD/CAD has begun to consolidate around the 1.23 handle. A mixture of profit taking from recent USD/CAD shorts, alongside the 55DMA (1.2242) has curbed the pair from further losses. That said, with oil prices extending to fresh multi-year highs, CAD may continue to perform well against the USD, despite 1.2240-50 being well respected. I suspect the bias for now will be to fade the extremes of the recent range.
USD/CAD (Inverted) vs Oil Prices
The main highlight for today’s session will be the US PCE data (the Fed’s preferred measure of inflation) and should the reading deviate notably from consensus then this can expect to prompt some volatility. Of course, USD bulls will likely to re-engage on a much higher than expected reading, however, with the Federal Reserve adamant that inflation is transitory, I wouldn’t expect this to notably move the needle for the Fed’s outlook.
Looking further out, the key focus for CAD traders will be on next week’s OPEC+ meeting where oil producers will discuss easing production quotas for August. A point to note regarding OPEC+ meetings, expect a plethora of source reports and for that, there is no better place to follow than #OOTT on Twitter.
USD/CAD Chart: Daily Time Frame