USD/CAD spikes to fresh daily top, upside potential seems limited amid bullish Oil prices – by hareshmenghani USDCAD Bonds Fed RiskAppetite Currencies
A fresh leg up in the US bond yields turns out to be a key factor lending support to the Greenback.The USD/CAD pair
rebounds nearly 50 pips from the 1.3630 region on Tuesday and touches a fresh daily peak during the first half of the European session. The pair is currently placed around the 1.3675-1.3580 area and for now, seems to have stalled last week's pullback from levels just above the 1.3800 round-figure mark.
The intraday uptick could be attributed to a modest US Dollar bounce from a two-day low, supported by a fresh leg up in the US Treasury bond yields. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company from the Federal Deposit Insurance Corporation eases fears of a full-blown banking crisis. Adding to this, regulators reassured that they stand ready to address any
shortfalls and push the US bond yields higher. That said, the Federal Reserve's signal last week that it might soon pause the rate-hiking cycle in the wake of the recent turmoil in the banking sector could cap the USD.by 25 bps on Wednesday, as was widely anticipated, though sounded cautious about the outlook. Furthermore, a generally positive risk tone around the equity markets might also contribute to keeping a lid on any meaningful gains for the safe-haven Greenback.
Market participants now look to the US economic docket, featuring the release of the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index. Apart from this, the US bond yields and the broader risk sentiment will drive the USD demand. This, along with Oil price dynamics, could produce short-term trading opportunities around the USD/CAD pair.
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