USD/CAD:PULLBACK SUPPORT AREA - POSSIBLE NEW LONG
The USD/CAD pair has firmly recovered after establishing a cushion of around 1.3340 in the Tokyo session. The Loonie asset has extended its recovery above 1.3370 as investors become nervous ahead of the release of the US Consumer Price Index (CPI), pouring funds into safe-haven assets due to investors' lack of appetite for risky investments.
The US Dollar Index (DXY) has risen to a three-day high of 103.39, as risk appetite has weakened further. Meanwhile, the S&P500 futures have been impacted by disappointing earnings from US equities and geopolitical events such as the Pentagon shooting down two unidentified flying objects in the last week.
Soaring expectations for a rise in US inflation data on Tuesday dampening demand for US government bonds, pushing 10-year US Treasury yields to 3.74%.
Despite the Federal Reserve (Fed) squeezing activities and raising interest rates, the strong US labor market is bolstering expectations for a surprise upside in the inflation report. If this occurs, Fed Chair Jerome Powell may be forced to extend the Fed's policy tightening spell into its March monetary policy. In addition, Philadelphia Fed President Patrick Harker expects interest rates to rise above 5% this year.
An upbeat employment report has conveyed that Canadian inflation may become more stubborn in the future. The economy added 150K jobs in January, exceeding the consensus of 15K and the previous release of 69.2K. The unemployment rate held steady at 5%.
The catalyst that pleased the Bank of Canada (BoC) was a drop in Average Hourly Earnings data, which fell to 4.5% from 4.7% in the previous release. A drop in the labor cost index will squeeze consumer spending and reduce future inflationary pressures.
After facing barricades of around $80.00 following a power-pack move, the oil price has dropped significantly. The upside appears to be favored, as Russia has announced a 5% cut in oil production in retaliation for the G7 price cap imposed to prevent funding for the ongoing war against Ukraine. It should be noted that Canada is a major oil exporter to the United States, and higher oil prices may strengthen the Canadian Dollar.
The US Dollar Index (DXY) has risen to a three-day high of 103.39, as risk appetite has weakened further. Meanwhile, the S&P500 futures have been impacted by disappointing earnings from US equities and geopolitical events such as the Pentagon shooting down two unidentified flying objects in the last week.
Soaring expectations for a rise in US inflation data on Tuesday dampening demand for US government bonds, pushing 10-year US Treasury yields to 3.74%.
Despite the Federal Reserve (Fed) squeezing activities and raising interest rates, the strong US labor market is bolstering expectations for a surprise upside in the inflation report. If this occurs, Fed Chair Jerome Powell may be forced to extend the Fed's policy tightening spell into its March monetary policy. In addition, Philadelphia Fed President Patrick Harker expects interest rates to rise above 5% this year.
An upbeat employment report has conveyed that Canadian inflation may become more stubborn in the future. The economy added 150K jobs in January, exceeding the consensus of 15K and the previous release of 69.2K. The unemployment rate held steady at 5%.
The catalyst that pleased the Bank of Canada (BoC) was a drop in Average Hourly Earnings data, which fell to 4.5% from 4.7% in the previous release. A drop in the labor cost index will squeeze consumer spending and reduce future inflationary pressures.
After facing barricades of around $80.00 following a power-pack move, the oil price has dropped significantly. The upside appears to be favored, as Russia has announced a 5% cut in oil production in retaliation for the G7 price cap imposed to prevent funding for the ongoing war against Ukraine. It should be noted that Canada is a major oil exporter to the United States, and higher oil prices may strengthen the Canadian Dollar.
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