USD/CAD pair struggled to capitalize on the overnight goodish rebound from sub-1.2900 levels, or a nearly two-week low, and met with a fresh supply on Tuesday. The pair maintained its offered tone through the early European session and was seen trading near the daily low, around mid-1.2900s.
The US dollar languished just above a one-week low touched on Tuesday amid diminishing odds for a 100 bps rate hike by the Federal Reserve at the upcoming meeting on June 26-27. It is worth recalling that several FOMC members said last week that they were not in favor of a bigger rate increase that the markets priced in following the release of red-hot US consumer inflation.
Subdued USD price action, along with continued worries about tight global supply, assisted crude oil prices to preserve the overnight strong gains to a multi-day high. This, in turn, underpinned the commodity-linked loonie and dragged the USD/CAD pair lower for the third successive day. That said, a combination of factors might hold back bearish traders from placing aggressive bets.
Investors remain concerned that surging crude will feed into a demand-killing recession, which should act as a headwind for the black liquid. Furthermore, market participants seem convinced that the recent surge in US consumer inflation to a four-decade high in June would force the Fed to deliver a larger rate hike later in the year. This should limit the downside for the USD.
Market participants now look forward to the US housing market data – Building Permits and Housing Starts – due later during the early North American session. The data might influence the USD demand, which along with oil price dynamics, should provide some impetus to the USD/CAD pair.
USD/CAD Short (Sell)
Enter at: 1.29016