USD/CAD drops to fresh multi-week lows, around 1.2435-30 region ahead of US data
- USD/CAD extended its post-BoC downfall and dropped to six-week lows on the first day of a new week.
- The USD found some support from an uptick in the US bond yields, though failed to lend any support.
- Bulls seemed unimpressed by a fresh leg down in crude oil prices, which tend to undermine the loonie.
The USD/CAD pair maintained its offered tone through the mid-European session and dropped to fresh six-week lows, around the 1.2435 region in the last hour.
The pair prolonged last week's post-BoC sharp retracement slide from levels just above the mid-1.2600s and witnessed some follow-through selling on the first day of a new trading week. The US dollar selling bias remained unabated through the first half of the trading action, which, in turn, was seen as a key factor that continued exerting some pressure on the USD/CAD pair.
In fact, the key USD Index dropped to the lowest level since early March amid firming expectations that the Fed will keep interest rates low for a longer period. On the other hand, a more hawkish Bank of Canada extended some support to the Canadian dollar. It is worth reporting that the BoC brought forward its guidance for the first interest rate hike to the second half of 2022.
Meanwhile, a goodish pickup in the US Treasury bond yields helped limit any further losses for the greenback, albeit did little to ease the bearish pressure or lend any support to the USD/CAD pair. Bulls even shrugged off and seemed unimpressed by sliding crude oil prices, now down around 1.5% for the day and which tend to undermine demand for the commodity-linked loonie.
Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders during the early North American session. This, along with the US bond yields, will drive the sentiment surrounding the USD. Apart from this, oil price dynamics might influence the USD/CAD pair and allow traders to grab some short-term opportunities.
Technical levels to watch