USD/CAD declines towards 1.3600 on hawkish BOC Macklem’s speech and firmer oil
- The Canadian Dollar is being supported by firmer oil prices and BOC Governor’s hawkish commentary.
- JP Morgan Chase & Co. see a spark in S&P500 post a drop in US Inflation data.
- Oil prices rebounded as a key pipeline supplying oil to the US remained shut.
The USD/CAD pair is displaying a fragile rebound after dropping to near 1.3620 in the early Asian session. Earlier, the Lonnie asset delivered a breakdown of the consolidation formed in a range of 1.3640-1.3680 on a hawkish speech from Bank of Canada (BOC) Governor Tiff Macklem. Also, a recovery in positive risk profile traction has supported the Canadian Dollar against the Greenback.
The US Dollar Index (DXY) is hovering inches higher from the crucial support of 105.00. An improvement in investors’ risk appetite led by a recovery in S&P500 has impacted safe-haven’s appeal.
Analysts at JP Morgan Chase & Co. believe that a soft reading in United States Consumer Price Index (CPI) data could spark a powerful rally in United States equities. The 500-stock basket of the United States could rally up to 10% if headline inflation drops to 6.9% or lower, as reported by Bloomberg.
While speaking to business leaders in Vancouver, BOC Governor said that policy tightening has begun to work but would take time to feed the economy. The present challenge in front of the BOC is that higher interest rates could push the economy into an unnecessarily painful recession, as reported by Reuters. He further added that elevated inflation levels despite higher interest rates will force the BOC to escalate policy tightening further to achieve price stability.
On the oil front, oil prices have rebounded sharply after picking demand above the critical support of $70.00. A Supply crisis was triggered as a key pipeline supplying the United States remained shut while Russian President Vladimir Putin threatened to cut production in retaliation for a Western price cap on its exports, reported Reuters.