USD/CAD sees bids near 1.3500 under a risk aversion theme, as oil looks to regain $80.00

After falling to roughly 1.3500 in the early Asian session, the USD/CAD pair has attracted purchasing interest. The Canadian dollar has strengthened as the risk-aversion theme gains traction over the volatile holiday week. After demonstrating a steep decline on Tuesday, the major currency has shown signs of reversal as higher oil prices have helped the Canadian Dollar.

Due to the absence of dependable triggers for decisive currency market movements, the risk profile is highly ambiguous. In addition, the market sentiment was unaffected by China's decision to ease restrictions on outbound tourists. On Tuesday, the S&P 500 remained under pressure as tech-savvy firms received intense heat. The US Dollar Index (DXY) has gone sideways near 103.80 after failing to surpass the important 104.00 resistance level.

In the meantime, the US Treasury bonds are affected by the risk aversion theme prompted by illiquid markets due to the holiday week. The yields on 10-year US Treasuries have increased to about 3.85%.

The Canadian Dollar hogged the attention on stronger oil prices. West Texas Intermediate (WTI) futures have slipped little but have continued their upside trajectory and are projected to reclaim the important resistance of $80.00 led by mounting supply worries and China’s progress towards reopening of the economy despite a jump in Covid cases.

After Russian President Vladimir Putin signed a directive prohibiting the sale of Russian oil to countries that enforced the oil price ceiling, supply concerns intensified.

Thomas M. Mertens, a researcher from the Economic Research Department of the Federal Reserve (Fed) Bank of San Francisco, developed a recession predictor based on macroeconomic time series, namely the unemployed unemployment rate. He stated that no forecasters now foresee a forthcoming recession in the following two quarters. Moreover, the unemployment rate does not now indicate an oncoming recession.