USD/CAD snaps a two-day losing streak on lower Crude prices, improves to near 1.3430
- USD/CAD edges higher on the escalated situation in the Middle East.
- Canadian Dollar faces challenges due to the lower Crude oil prices.
- US Fed is expected to implement more significant policy rate reductions in 2024 compared to other central banks.
USD/CAD grapples to snap a two-day losing streak with starting the week trading higher near 1.3430 during the Asian hours on Monday. The lower Crude oil prices are putting pressure on the Canadian Dollar (CAD), which in turn, underpins the USD/CAD pair. Additionally, the US Dollar could potentially find support due to its safe-haven status, particularly amid concerns regarding maritime trade in the Red Sea. Both the US and the UK are looking to escalate their campaign without inciting a broader conflict with Iran, leading to more ships diverting away from the Suez Canal and the Red Sea.
West Texas Intermediate (WTI) price continues to move on a downward trajectory, trading near $73.30 per barrel, by the press time. Crude oil prices are under downward pressure due to various factors. One significant factor is the sluggish economic recovery in China, casting uncertainty on oil demand in the world's largest oil-importing country. Additionally, the extreme cold weather in the United States (US) has constrained travel in extensive regions, raising concerns about a potential slowdown in oil demand.
The US Dollar Index (DXY) moves on a consecutive two-session decline, influenced by market expectations that the US Federal Reserve (Fed) might implement more significant policy rate reductions in 2024 compared to other major central banks worldwide.
Traders will observe the economic indicators such as the US Richmond Fed Manufacturing Index and Canadian housing data scheduled for release on Tuesday. These data points could offer further impetus to the economic scenarios in both nations.