- USD/CAD fell 40 pips as WTI climbed to new monthly highs.
- Market sentiment curbed appetite for high beta currencies such as the Canadian dollar.
- In the week ahead, the Canadian GDP report will be the focus of investors’ attention.
As the US session began, the Canadian dollar was trading above 1.2700 due to a decline in market sentiment. As the session progresses, USD/CAD has merely gained 0.09%, as it is currently trading at 1.2667..
As mentioned above, market sentiment is bearish. Evergrande’s concerns about a spillover could be realized. Despite having 30 days to meet the coupon, the Chinese real estate giant missed interest payments on the dollar-denominated bond due Thursday. Also weighing on the mood was the Fed’s expectation of a gradual tapering of bonds later in the year, and half of the FOMC members looking for a rate hike in the second half of 2022, according to the Dot Plot.
WTI hit a new two-month high above $74.00.
Turning to USD/CAD, oil prices are leading the way. WTI rose to a monthly high of $74.14, gaining 1.10% on the day, boosting the oil commodity Canadian dollar, as the pair struggled at 1.2700 as the New York session began.
According to the U.S Census Bureau, new home sales increased by 0.74 million in August, better than the 0.70 million expected and 0.708 million from the previous reading. At the time of publication, the U.S. dollar index traded at 93.29, up 0.23%.
The Canadian economy will release its Gross Domestic Product for July on Thursday, which is expected to be 0.7% on a month-to-month basis. Meanwhile, Friday will see the release of the manufacturing PMI for September, which is expected to be 57.2.
The U.S. Census Bureau will release durable goods orders for August on Monday, which are expected to be up 0.6%. Additionally, orders for non-defense capital goods, excluding aircraft, will also be released.