Home Forex USD/CAD rises 0.14% intraday

USD/CAD rises 0.14% intraday

by Jonathan Adams

ECB policymakers’ hint for further negative rates and the Fed’s dovish halt was the main to propel the USD

USD/CAD takes the bids near 1.2820, up 0.14% intraday, during Thursday’s Asian session. In doing so, the quote keeps the previous day’s upside momentum that marked the heaviest jump in three months amid the broad US dollar strength and weakness in Canada’s main export item crude oil.

On Wednesday, the US dollar index (DXY) rose the most in two weeks, currently around 90.60, after risk aversion wave drove traders towards the greenback. Among the main catalysts, the ECB policymakers’ hint for further negative rates and the Fed’s dovish halt was the main to propel the USD.

Dutch Governor Klass Knot rekindled the rate cut chatters while the US central bank conveyed moderate economic activity and employment when announcing no rate change. It should be noted that Fed Chair Jerome Powell tried to placate the pessimism with the hopes of economic recovery, backed by vaccination, but failed to hide fears over economic uncertainty.

Other than the central bankers, US stimulus gridlock and the EU-UK tussle over the lack of vaccine in the block also heavy the risks amid a light calendar in Asia.

Against this backdrop, S&P 500 Futures drop 0.80% after Wall Street benchmarks flashed over 2.0% losses each during the previous day.

It’s worth mentioning that the souring mood favoured the US dollar and weighed on the commodities, taking the WTI crude oil down and exerting extra downside pressure on the Canadian Dollar. The energy benchmark ignored downbeat official inventories while following the risk catalysts. US EIA weekly inventory numbers showed stocks dropping 9.91 million barrels versus expectations for a small 0.430 million barrel build.

Moving on, preliminary reading of the fourth quarter (Q4) US GDP, expected 3.9% QoQ versus 33.4% prior, will be the key as traders will wait to confirm Fed’s dovish outlook. Also likely to propel the USD/CAD are the downbeat expectations from Canadian Building Permits for December, forecast -5.0% against +12.9% prior.

This article is for information purposes only.
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