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Market News USD/CAD struggles to regain 1.2900 due to weaker oil and a stronger USD ahead of US inflation data

USD/CAD struggles to regain 1.2900 due to weaker oil and a stronger USD ahead of US inflation data

The USD/CAD falls from its intraday peak and ends the day unchanged. Oil prices do not justify the suspension of a Russian pipeline, and demand optimism coexists with economic fears. US currency follows rates and Fed hawkish bets ahead of the crucial US CPI for July.

Alina Haynes
2022-08-10
527

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USD/CAD retreats from its intraday high of 1.2895 as bulls and bears fight amid mixed triggers and market concern ahead of Wednesday's crucial US data release. Nonetheless, weaker prices of Canada's primary export commodity, WTI crude oil, and the recently strengthened US Dollar Index (DXY) kept purchasers optimistic.

 

WTI crude oil prices continue under pressure around $89.60, down 0.35 percent intraday, as fears of a recession outweigh supply-shortage worries. Following Russia's cessation of oil exports, rumors of an economic slowdown in the Eurozone grew. According to Reuters, Russia has halted oil supplies via the southern segment of the Druzhba pipeline due to transit payment concerns. According to Reuters, this disregards the optimism expressed by US oil refiners and pipeline businesses. "US oil refiners and pipeline operators expect energy consumption to be robust in the second half of 2022," according to the news. "Analysts and industry observers have expressed concern that demand could decline if the global economy enters a recession or if high gasoline prices discourage travelers."

 

The DXY fluctuates around 106.30 after bouncing off 105.95 the day before. In doing so, the dollar index vs the six major currencies reflects the stronger US Treasury yields, while also profiting from the market's rush for risk protection before to the release of crucial inflation data.

 

Wall Street's disappointing performance and a rise in 10-year US Treasury yields to 2.79 percent were indicative of a risk-averse sentiment. In addition, S&P 500 Futures exhibit slight losses as of press time, trading around 4,120.

 

In July, China's Consumer Price Index (CPI) and Producer Price Index (PPI) data will provide USD/CAD traders with quick direction. However, substantial focus will be placed on the US CPI, which is anticipated to decline to 8.7% from 9.1% on YoY, as well as the CPI ex Food & Energy, which is anticipated to rise from 5.9% to 6.1%, amidst aggressive Fedspeak and recession rumors.

 

USD/CAD illustrates the inability to sustain the bounce from the 100-day moving average (DMA) level near 1.2800, which was observed over the previous week. Given the sluggish MACD and stable RSI bolstering the recent southward grind, the pair is expected to remain weaker.


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