USD/CAD struggles to find direction
Monday 22 May, 2023
Daily Currency UpdateUSD/CAD was seen oscillating directionless during the early European trading sessions but found some positive traction after a slight bounce in crude prices. This slight upward trend in oil prices is supporting the commodity-linked CAD and turned out to be a key factor acting as a headwind for USD/CAD pair amid subdued greenback price action. Another headwind for the USD is a slight optimism in the market over a possible betterment in relations between the US and Chine. However, one downside for the USD hovered around worries of sluggish global growth, mainly in China. This is believed to reduce fuel demand, capping the upside for oil prices, and limiting any meaningful movement for the USD/CAD pair. The key focus this week will be on the meeting between US President, Joe Biden, and House Republican Speaker, Kevin McCarthy, to discuss the debt ceiling.
Key MoversThe EUR/USD pair retreated from its intraday highs, dropping to 1.0810 levels. The European Central Bank (ECB) President, Christine Lagarde, commented earlier today, “I think we covered a large chunk of the journey toward taming inflation and bringing it back to our target.” The euro’s performance will be guided mainly by three things, consumer confidence, the first readings of the May PMI data, and the ongoing US debt ceiling discussions.
The GBP/USD pair attracted some positive traction and had a mild positive bias through the first half of the European session. GBP/USD was last seen trading at 1.2415 levels. The upside for the pair was mainly under the market expectations that fewer rate increases by the Bank of England (BoE) will be needed to cool down inflation. However, the market was left confused after BoE Governor, Andrew Bailey, commented that there were some signs of a cooling of inflation and that the labor market is loosening a little. The pair was recently seen with a lack of direction in the absence of any relevant market-moving economic data, either from the UK or the US.
Crude oil prices dip lower amidst concerns over global trade fears and a potential stall in overall growth after the antagonization of China at the G7 summit by the world’s leading economies. West Texas Intermediate (WTI) oil was last seen trading at the 71.74 level and Brent crude oil was seen trading at the 74.30 level.
- EUR/CAD: 1.4584 - 1.4626 ▼
- GBP/CAD: 1.6779 - 1.6832 ▼
- AUD/CAD: 0.8953 - 0.8989 ▼
- USD/CAD: 1.3487 - 1.3515 ▲