DailyBubble News
DailyBubble News

USD/CAD rebounds above 1.3650 amid firmer US Dollar, lower crude oil prices

The USD/CAD pair is trading near 1.3685 during early European trading hours on Tuesday, benefiting from a rebound in the US dollar and a drop in oil prices. Investors are awaiting the Canadian Ivey Purchasing Managers Index for April for further direction.

Speculation of rate cuts in the US has been fueled by recent labor market data and comments from Federal Reserve officials. Richmond Fed President Thomas Barkin believes that the current interest rate level should help bring down inflation to the Fed’s 2% goal. New York Fed President John Williams also hinted at potential interest rate cuts in the future.

Geopolitical tensions in the Middle East have strengthened the US dollar as safe-haven demand rises. Israel’s war cabinet voted to continue military action against Hamas, leading to heightened uncertainty in the region.

On the other hand, the Canadian dollar may face headwinds in the near term as the Bank of Canada moves closer to potential rate cuts compared to the Fed. This could limit the downside for USD/CAD for now. Additionally, the Loonie is under pressure from declining oil prices, as Canada is a major exporter of oil to the US.

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