USD/CAD approaches 1.38 as oil undergoes a further correction
Daily Currency Update
USD/CAD pair reached a six-month high at 1.3785 and continued its upward momentum toward 1.3800 during the European trading session. The Canadian dollar has been influenced by the demand of the US dollar and the ongoing decline in oil prices. The oil market remains under pressure due to growing concerns among investors about the global economic slowdown, which is impacting the demand for oil.It's important to highlight that Canada is the primary exporter of oil to the United States, so when oil prices drop, it has a detrimental effect on the Canadian dollar. The US dollar and the Canadian dollar are expected to respond to their respective official labor market data, set to be released this Friday. For the third week in a row, the price of Western Texas Intermediate (WTI) crude oil is on a downward trend, currently trading around $83.23 per barrel in the European trading session on Thursday. This decline in crude oil prices may be linked to the recent strengthening of USD.
Key Movers
his morning, EUR/USD pair traded within a narrow range just above the 1.0500 mark on Thursday, as market participants maintained a cautious outlook ahead of employment-related signals from the United States (US). Earlier in the week, hawkish remarks from US Federal Reserve officials dampened sentiment by suggesting the possibility of a rate hike in the November meeting due to persistent high inflation.Government bond yields have surged to levels not seen since 2007, reflecting concerns among speculative traders. The yield on the 10-year Treasury note has risen notably. This has bolstered the US dollar's position in response to market apprehensions, although extreme overbought conditions led to a corrective decline on Wednesday. Nevertheless, the USD continues to trade near recent multi-month highs against most major currencies, showing no indication of a shift in its trajectory.
In terms of data, Germany released its August Trade Balance, which revealed a surplus of €16.6 billion, surpassing expectations of €15 billion. However, the report showed a 1.2% drop in exports and a 0.4% decrease in imports for the month. Meanwhile, the US released its Goods and Services Trade Balance, indicating a deficit of $58.3 billion, which was better than anticipated. Additionally, the US published Initial Jobless Claims for the week ending September 29, with a figure of 207K, and reported September Challenger Job Cuts, revealing that US-based employers announced 47,457 job cuts during the month, marking a 37% decrease from the 75,151 cuts announced in August but a 58% increase from the 29,989 cuts announced in September 2022. During Thursday's Asian trading hours, GBP/USD saw an ascent above 1.2150 but subsequently struggled to maintain its momentum. Nevertheless, the pair was able to find stability above the 1.2100 level during the European session.
USD encountered challenges in finding demand during the latter part of Wednesday, primarily due to an improved risk sentiment. This shift in market sentiment contributed to GBP/USD recovering some of its losses for the week. Additionally, the USD faced additional pressure from disappointing labor market data from the US, which indicated that private sector employment only increased by 89,000 in September.
Expected Ranges
- EUR/CAD: 1.431 - 1.449 ▼
- GBP/CAD: 1.6668 - 1.619 ▲
- AUD/CAD: 0.8689 - 0.8744 ▲
- USD/CAD: 1.3712 - 1.3782 ▲