USD/CAD faces pressure near 1.3900 as oil recovers, Fed policy looms
- USD/CAD finds offers near 1.3900 as oil price recovers strongly.
- The market mood remains risk-off ahead of Fed policy.
- In October, fresh US private payrolls were 113K, lower than expectations of 159K.
The USD/CAD pair faces selling pressure near the round-level resistance of 1.3900 in the early New York session. The Loonie asset remains subdued as a strong recovery in oil prices has strengthened the Canadian Dollar.
Oil prices recovered sharply as the Israeli defense forces (IDR) entered Gaza for a full-scale invasion, which is elevating fears of Iran’s intervention in the Israel-Palestine conflicts. If Iran intervenes, the oil supply chain will be disrupted significantly. It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices support the Canadian Dollar.
The market sentiment is downbeat as investors await the Federal Reserve’s (Fed) monetary policy. As per the CME Fedwatch tool, the decision to keep interest rates unchanged in the range of 5.25-5.50% is certain. However, hawkish guidance is expected due to robust consumer spending and strong labor market conditions.
The US Dollar Index (DXY) climbs close to the crucial resistance of 107.00 despite weak US private payroll data for October. The US Automatic Data Processing (ADP) reported that employers hired 113K job seekers, which was lower than expectations of 159K but significantly higher than the former reading of 89K.
On the Canadian Dollar front, Bank of Canada (BoC) Governor Tiff Macklem said that the central continues to assess whether monetary policy is sufficiently restrictive and is ready to do whatever is required to restore price stability.