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USD/CAD falls below 1.2870 as DXY struggles around 104.00 and oil prices surpass $110.00
The USD/CAD exchange rate fell below 1.2870 as oil prices rose sharply. The DXY is battling to cross 104.00 on the back of escalating recession concerns. The Fed's rapid rate rise announcements raise prospects for a liquidity-constrained environment.
After breaking below the key support of 1.2870, the USD/CAD pair has had a little decline to about 1.2860. As oil prices have prolonged their recovery and are auctioning over the psychological resistance of $110.00, it is anticipated that the asset will extend its losses and settle below 1.2860.
Notable is the fact that Canada is the biggest oil exporter to the United States. Consequently, rising oil prices result in increased capital flows to Canada. Rather than focusing on advanced recession worries, investors have begun to support the existing supply limits, which has led to a significant comeback in oil prices.
After Western leaders prohibited oil imports from Russia, the OPEC cartel is seeking to resolve supply difficulties. Saudi Arabia and the United Arab Emirates (UAE) are the only OPEC nations with the capacity to significantly increase the world oil supply. Both nations are seeing high prices and abundant supplies.
In the meantime, the US dollar index (DXY) struggles to decisively breach the round-level resistance of 104.00. As quickly as the Federal Reserve (Fed) increases interest rates, worries of a recession increase in intensity. In its July monetary policy, the Fed will undoubtedly raise its borrowing rates to at least 2 percent. In the United States, a two percent interest rate is adequate to constrict market liquidity. This will compel the business sector to focus on ultra-selective investment projects, resulting in a prolonged decline in labor demand.
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