- USD/CAD catches fresh bids on Friday and reverses the overnight slide to the weekly low.
- Subdued oil prices undermine the loonie and offer support amid a modest USD strength.
- The market focus remains on Fed Chair Jerome Powell’s appearance at the Jackson Hole.
The USD/CAD pair regains positive traction on Friday and reverses a major part of the previous day's slide to sub-1.2900 levels, or a fresh weekly low. The pair maintains its bid tone through the first half of the European session and is currently placed near the daily high, just above mid-1.2900s.
Crude oil prices consolidate the overnight sharp retracement slide from a three-week low, which seem to undermine the commodity-linked loonie. This turns out to be a key factor lending support to the USD/CAD pair amid the emergence of some US dollar buying, bolstered by hawkish Fed expectations.
The progress in renewing Iran's nuclear deal raises hopes for the return of sanctioned Iranian oil to the markets. Apart from this, concerns that a deeper global economic downturn will dent fuel demand overshadow the prospects of production cuts by major oil producers and weighs on the black liquid.
The greenback, on the other hand, moves away from the weekly low touched the previous day and continues to draw support from growing acceptance for a further policy tightening by the Fed. The bets were reaffirmed by the upbeat US macro data and hawkish remarks by Fed officials on Thursday.
In fact, St. Louis Fed chief James Bullard noted that rates now are not yet high enough to begin curtailing price pressures. Furthermore, Kansas City Fed President Esther George said the Fed hasn’t yet raised rates to levels that weigh on the economy and may have to take them above 4% for a time.
Policymakers, however, reserved their judgment on the size of the rate increase at the September FOMC policy meeting. Hence, the focus remains on Fed Chair Jerome Powell's speech at the Jackson Hole Symposium, which might provide clues about the possibility of a 75 bps rate hike in September.
Heading into the key event risk, traders on Friday might take cues from the US Core PCE Price Index, due for release later during the early North American session. In the meantime, the cautious mood might continue to benefit the safe-haven USD and offer some support to the USD/CAD pair.
Technical levels to watch
|Today last price||1.2954|
|Today Daily Change||0.0030|
|Today Daily Change %||0.23|
|Today daily open||1.2924|