USD/CAD traded on an upbeat sentiment on Friday, paring back some losses recorded yesterday ahead of the US session. The reason behind yesterday’s momentum can be traced to the pause in the price of the WTI crude oil, Canada’s main export, and the downbeat US Treasury yields. The WTI currently trades around the $71.00 mark or -1% today.
That said, it appears that the “black gold” ignored the halt in the US-Iran nuclear talks and the US-Sino standoff over Xinjiang-related issues.
Meanwhile, the prevailing risk-off market mood failed to extend support to the US Treasury bond yields as the US Fed tightens its monetary policy, which fueled demand for the US bond. Not surprisingly, the same sentiment exerts pressure on the US dollar (DXY), favoring USD/CAD bears.
USD/CAD Liable for Extra Declines as DCY Fails to Act on Hawkish Fed Stance
Furthermore, the US 10-year Treasury yield dropped for the second consecutive day as stock futures and Asia-Pacific stocks plunged.
With the prevailing mixed sentiment and the failure of the US dollar to capitalize on the US Fed’s hawkish stance, USD/CAD bears should double down on short positions soon. However, the calendar signals a quiet end to the busy week, making it prudent for traders to await a supporting catalyst(s) for fresh impulse.
That said, Loonie could post a leg down in the coming hours and likely close the week on a bearish note.
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