Canadian Dollar slides to fresh low since late March vs USD despite rallying Oil prices
The USD/CAD pair touched a fresh high since late March during the Asian session on Monday and looks to build on the strength further beyond mid-1.3900s. However, a goodish pickup in Crude Oil prices, along with Friday's upbeat Canadian jobs report, underpins the commodity-linked Loonie and might cap any further gains amid a subdued US Dollar (USD) price action.
WTI Crude Oil prices climb around 4.50% as Iran's missile attack on Israel’s Ramat David air base on Sunday night threatened a fragile ceasefire and tempered hopes for a deal to end a three-month-old conflict. Moreover, Statistics Canada reported on Friday that the economy added 87,800 jobs in May and the unemployment rate fell to 6.6%, which further offers support to the Canadian Dollar (CAD) and warrants caution for the USD/CAD bulls.
Meanwhile, the USD pause for a breather following Friday's upbeat US Nonfarm Payrolls (NFP) report-inspired blowout rally to a two-month high and contributed to capping the currency pair. In fact, the economy added 172K jobs in May, compared to 85K estimated and the previous month's upwardly revised reading of 179K. Moreover, the Unemployment Rate held steady at 4.3%, offsetting the expected slowdown in Average Hourly Earnings.
Traders were quick to react and are now pricing in over a 70% chance that the US Federal Reserve (Fed) will hike interest rates by the end of this year. Apart from this, persistent geopolitical uncertainties should act as a tailwind for the safe-haven USD. In the latest developments, the Israeli air force hit military targets in western and central Iran in retaliation for the latter's ballistic missile attack on Israel’s Ramat David air base on Sunday night.
This, in turn, suggests that the path of least resistance for the USD is to the upside and backs the case for an extension of the USD/CAD pair's recent well-established uptrend witnessed over the past month or so. Moving ahead, there isn't any relevant market-moving economic data due for release on Monday, either from the US or Canada, leaving the USD/CAD pair at the mercy of Oil price dynamics and incoming geopolitical headlines.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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