- USD/CAD strengthens due to the Fed’s hawkish tone on the path of interest rates.
- US employment data bolsters US yields, providing support for the Dollar.
- Falling crude oil prices put pressure on the Canadian dollar.
USD/CAD appears to be moving higher for the fourth consecutive day, trading higher near 1.3710 at the start of the European session on Wednesday. The pair finds bullish support amid cautious sentiment due to hawkish expectations on interest rates from the US Federal Reserve (Fed).
The US Dollar Index DXY is hovering around the 107.10 level at the time of writing, close to the 11-month high it marked on Tuesday. The strength of the Dollar is due to good employment data and rising Treasury yields.
US JOLTS job openings exceeded expectations, contributing to a rise in US Treasury yields. The 10-year US bond yield hit its highest level since 2007 on Wednesday, standing at 4.85%.
The JOLTS report revealed that job openings increased to 9.61 million in August from 8.92 million previously, exceeding market expectations. Furthermore, the hawkish tone surrounding the Fed to keep interest rates higher for an extended period is reinforcing positive sentiment for the Dollar.
Cleveland Federal Reserve President Loretta Mester favored raising interest rates at the next meeting if current economic conditions persist. On the other hand, Atlanta Fed President Raphael Bostic shared a patient outlook on the Fed’s policy outlook, stating that there is no rush to raise or lower rates.
Market participants are eagerly awaiting US employment data, with the ADP report due on Wednesday and non-farm payrolls due on Friday.
On the Canadian side, the S&P Global Manufacturing PMI was released on Monday, reporting a decline to 47.5 in September, down from 48.0 previously.
In addition, the fall in crude oil prices weighs on the CAD, a currency linked to raw material prices, since the country is the main exporter of oil to the United States. At the time of writing, West Texas Intermediary (WTI) crude oil was trading lower, around $88.00 per barrel.
The Ivey Canada Purchasing Managers’ Index would likely be the focus of investors for further clues on business conditions in the country.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
