Canadian Dollar depreciates due to lower Oil prices, Fed Minutes ahead

Source Fxstreet
May 22, 2024 09:23
  • The Canadian Dollar lost ground amid lower crude Oil prices.
  • US Dollar appreciates due to higher US yields ahead of FOMC Minutes.
  • WTI prices continue losing due to expectations of the Fed maintaining higher rates for longer.

USD/CAD extended gains for the third successive session, trading around 1.3660 during the European hours on Wednesday. The appreciation of the pair could be attributed to a stronger US Dollar (USD), possibly led by the higher US Treasury yields. Traders await the Minutes from the Federal Open Market Committee (FOMC) meeting held on May 1, seeking further clues about the Fed's policy stance.

The US Dollar Index (DXY), which measures the value of the Greenback against the other 6 major currencies, edges higher to near 104.70 with 2-year and 10-year yields on US Treasury bonds standing at 4.56% and 4.43%, respectively, by the press time.

The Federal Reserve (Fed) maintains a cautious stance regarding inflation and the potential for rate cuts in 2024. Speaking at the event titled "Central Banking in the Post-Pandemic Financial System" on Wednesday, Federal Reserve Bank of Boston President Susan Collins emphasized that progress toward interest rate adjustment will take longer. Additionally, Fed Governor Christopher Waller mentioned that he would need to observe several more months of positive inflation data before feeling comfortable supporting a policy easing.

On the CAD front, lower crude oil prices are exerting pressure on the Canadian Dollar (CAD), given Canada's status as the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price trades around $77.80 per barrel, at the time of writing. The decline in crude Oil prices could be attributed to expectations of the Federal Reserve maintaining higher interest rates for an extended period, which may impact fuel consumption in the US, the world's largest Oil consumer.

The Bank of Canada's (BoC) preferred trimmed-mean core inflation rate eased to 2.9%. Moreover, the BoC’s median core rate dropped more than anticipated to 2.6%, marking its lowest level since June 2021. These developments have bolstered expectations of a rate cut from the BoC in June, thereby undermining the Canadian Dollar (CAD).

USD/CAD

Overview
Today last price 1.3664
Today Daily Change 0.0010
Today Daily Change % 0.07
Today daily open 1.3654
 
Trends
Daily SMA20 1.3673
Daily SMA50 1.3638
Daily SMA100 1.3556
Daily SMA200 1.357
 
Levels
Previous Daily High 1.3676
Previous Daily Low 1.3615
Previous Weekly High 1.3691
Previous Weekly Low 1.359
Previous Monthly High 1.3846
Previous Monthly Low 1.3478
Daily Fibonacci 38.2% 1.3652
Daily Fibonacci 61.8% 1.3638
Daily Pivot Point S1 1.3621
Daily Pivot Point S2 1.3587
Daily Pivot Point S3 1.356
Daily Pivot Point R1 1.3682
Daily Pivot Point R2 1.3709
Daily Pivot Point R3 1.3743

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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