USD/CAD Eyes Exhaustion at 1.2830 as Oil Rebounds, BOC Macklem in Focus
- USD/CAD is showing a sense of exhaustion after hitting highs at 1.2830.
- Oil prices rebounded strongly after the announcement of a prudent monetary policy in China.
- Macklem’s speech from the BOC will remain front and center.
USD/CAD is showing signs of exhaustion after a massive bullish move from the previous week’s low at 1.2458. The asset rose as negative market sentiment supported safe-haven assets. While exhaustion signals at monthly highs of 1.2830 could be associated with a firmer rebound in oil prices.
China’s pledge to support its economy with prudent monetary policy has breathed new life into oil prices. More liquidity in the economy to support demand will bring oil requirements back to normal. Oil prices recovered the $100.00 mark. Black gold did not perform well as the outbreak of Covid-19 in Beijing from Shanghai reignited fears of an aggregate demand slippage in China. Also, mass testing in Beijing has been advocated for tough lockdown measures.
It should be noted that China is the largest importer of oil and any concerns about demand for oil from the dragon economy could impact oil prices. Additionally, Canada is the largest exporter of oil to the United States and rising oil prices are leading to increased inflows to the loonie region.
Looking ahead, investors will focus on Bank of Canada (BOC) Governor Tiff Macklem’s speech, which is due to be delivered on Tuesday. Additionally, the quarterly US Gross Domestic Product (GDP) figure will fall on the same day, which is expected to land at 7.2%.