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USD/CAD Rises to 1.3380 Amid Declining Crude Prices and Mixed US Economic Data


8 January 2024 Written by Sandro Pontedra  Finance Industry Expert Sandro Pontedra

The USD/CAD currency pair has been on an upward trajectory, reaching around 1.3380 in the European trading session on Monday. This movement is primarily influenced by the weakening Canadian Dollar (CAD), which is closely tied to crude oil prices. The recent downturn in West Texas Intermediate (WTI) crude oil prices, now hovering near $73.00 per barrel, has applied significant downward pressure on the CAD.

Factors Impacting Crude Oil Prices

US Dollar Dynamics Amidst Economic Data

Despite the movement in the USD/CAD pair, the US Dollar Index (DXY) has remained relatively muted, showing a slight negative bias near 102.40. This stance of the US Dollar is possibly a result of improved risk appetite following the release of mixed US economic data last Friday.

Analysis of US Economic Indicators

Market Outlook and Upcoming Data

The juxtaposition of strong labor market data against the backdrop of a slowing services sector adds complexity to the economic landscape. This mixed economic scenario is likely influencing traders’ strategies and market sentiment. Market participants are now looking forward to the upcoming Consumer Price Index data on Thursday, which will provide further insights into inflation and could impact the Federal Reserve's monetary policy decisions.

In summary, the rise in USD/CAD to 1.3380 is primarily driven by declining crude oil prices, impacted by Saudi Arabia's pricing strategy and OPEC+ output decisions. The mixed economic data from the US, reflecting a robust labor market but a slowing services sector, adds layers to the currency pair's dynamics. Investors and traders will be closely monitoring upcoming economic releases, particularly the US CPI data, to gauge the direction of both the US and Canadian economies.


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