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    USD/CAD extends its losses on upbeat Crude prices, edges lower to near 1.3450

    FXStreet
    Updated Feb 8, 2024 06:03
    Mitrade

    ■   USD/CAD loses ground despite the hawkish Fed stance on interest rate trajectory.

    ■   WTI price strengthens as Israel has rejected Hamas' proposal for a ceasefire.

    ■   BoC projects that Canadian inflation will persist above 2% until sometime in 2025.


    USD/CAD continues to move in a downward direction for the third straight day, edging lower to near 1.3450 during the Asian session on Thursday. The upbeat Crude oil prices are contributing support to strengthening the Canadian Dollar (CAD), which, in turn, acts as a headwind for the USD/CAD pair.


    West Texas Intermediate (WTI) oil price hovers around $74.20 per barrel, at the time of writing. Crude oil prices are expected to maintain their upward trajectory, with a potential obstacle emerging in the process of a ceasefire in the Israel-Gaza conflict. Israeli Prime Minister Benjamin Netanyahu has rejected Hamas' proposal for a ceasefire and the release of hostages in the Gaza Strip.


    However, US Secretary of State Antony Blinken has indicated the possibility of further negotiations to achieve a resolution. Additionally, a Hamas delegation, led by senior official Khalil Al-Hayya, is scheduled to travel to Cairo on Thursday for discussions with Egypt and Qatar aimed at reaching a ceasefire agreement.


    The Bank of Canada (BoC) projections that Canadian inflation will persist above 2% until sometime in 2025. BoC underscored global economic challenges, highlighting the resilience of consumer spending in the United States (US) as a mitigating factor against downside risks.


    The US Dollar Index (DXY) seems to continue its downward trend for the third consecutive session, hovering around 104.00, by the press time. The Greenback faces challenges on downbeat US Treasury yields despite the US Federal Reserve (Fed) emphasizing its commitment to keeping interest rates elevated for quite some time. Federal Reserve Chair Jerome Powell dismissed the possibility of a rate cut in March and committed to monitor inflation sustainably returning to the 2% target.


    Federal Reserve Governor Adriana Kugler expressed contentment with the notable progress on inflation during remarks made on Wednesday, expressing optimism that this positive trajectory will endure. Fed Boston President Susan Collins, addressing the Boston Economic Club, suggested the possibility of rate cuts later in the year if the economy meets expectations.


    Market participants will focus on US jobs data on Thursday, including Initial Jobless Claims for the week ending on February 2. On Canada’s side, the Unemployment Rate and Net Change in Employment will be released on Friday.

    * The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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