USDCAD climbs toward 1.3400 as DXY recovers and oil prices decline

After a corrective dip to about 1.3370 during the Asian session, the USDCAD pair has recouped its losses and is now trading near 1.3370. Following the rise of the US dollar index (DXY) and a lackluster performance at the oil counter, the asset has seen a comeback. As a result of the risk profile's support for the risk-averse theme, the DXY is striving to rise over the crucial level of 107.00.

After a solid Friday, S&P500 futures have experienced modest losses in early Tokyo trading. The 500-stock index ended last week unchanged due to the absence of any possible triggers. In light of President Raphael Bostic's less aggressive guidance for the Federal Reserve (Fed), 10-year US Treasury rates are expected to stay on edge.

As reported by Reuters, Fed policymakers believe the run of 75 basis point (bps) rate hikes has ended and a lesser rate hike will be noted in December monetary policy by the US central bank. He added that the Fed would stop raising interest rates sooner and sees opportunity for a modest 100 basis point growth in the future. Yields on 10-year US Treasuries have seen a little drop to around 3.81 percent.

In the meantime, Lonnie investors await the publication of the Retail Sales report on Tuesday. Compared to the previous expansion of 0.7%, it is anticipated that the economic data will decline 0.7%. A big decline in Retail Sales shows that consumer spending is experiencing difficult times, which will mitigate the escalation of inflationary pressures.

On the oil front, prices have risen after a shaky performance, but are vulnerable to additional declines as the number of Covid-19 infections in China rises. Going forward, the People's Bank of China's (PBOC) monetary policy will remain a focal point. As a key oil importer, China's economic outlook has a significant impact on oil prices.