With Weakening Oil Price And Negative Sentiment, USD/CAD Bulls Approach Monthly Barrier Around 1.3480

USD/CAD surpasses 1.3450 on Friday morning as bulls hold control for a fourth consecutive session on broad US Dollar strength and falling WTI crude oil prices. In doing so, the Loonie pair validates the dovish language of Bank of Canada (BoC) officials in contrast to the hawkish discourse of Federal Reserve (Fed) policymakers and favorable US statistics.

Recently in Asia, BoC Deputy Governor Paul Beaudry noted, "The floating Canadian dollar allows the bank to chart a different route than its trading partners and to focus on setting interest rates." The same confirms the dovish perspective of the Canadian central bank, as BoC Governor Tiff Macklem previously confirmed when he declared on Thursday, "There are indications that our interest rate increases are beginning to cool demand and restore equilibrium to our overheated economy.

In contrast, Loretta Mester, head of the Cleveland Fed, alluded to recession concerns while repeating her past support for the highest interest rates. James Bullard of the Federal Reserve Bank of St. Louis noted, "Continued policy rate increases can help lock in a disinflationary trend in 2023, notwithstanding continuing expansion and solid labor markets, by maintaining low inflation expectations."

Since June, when it rose 0.7% month-over-month, the US Producer Price Index (PPI) for January has gotten the most attention from USD/JPY purchasers. The improvement in US Initial Jobless Claims for the week ending February 10 (194K as opposed to 200K expected and 195K previously) was also positive for the pair. In contrast, the fall in Housing Starts in January and the Philadelphia Fed Manufacturing Survey in February appear to have received attention.

At the time of writing, the price of WTI crude oil had registered small gains and reduced weekly losses to approximately $78.40. Given Canada's reliance on WTI exports, the weekly decrease in the price of black gold is positive for USD/CAD bulls.

The USD/CAD currency rate is influenced by geopolitical issues in addition to central bank debates, US statistics, and Oil's movement. But, the recent escalation of tensions between the United States and China, as well as Russia's refusal to back down from its attack on Ukraine, weigh on risk appetite and drive the Loonie-Dollar pair due to safe-haven demand for the Dollar. During an interview with NBC News, Vice President of the United States Joseph Biden launched shots at his Chinese counterpart and expressed his hopes for a chat with the Chinese leader. I believe that fundamentally severing connections with the United States and myself is the last thing Xi would desire "President Biden cited Reuters in his statement.

As a result of these tactics, 10-year US Treasury note rates have reached their highest level since December 30, 2022, climbing 3.5 basis points to 3.87 percent as of press time. In a similar vein, the rates on two-year US Treasury bonds end Thursday around 4.64 percent, the highest level since November 2022, and reach 4.65 percent at the absolute latest. In addition, Wall Street closed in the red, while intraday S&P 500 Futures declined 0.30 percent as of press time.

Although the Oil price licking its wounds, the risk-averse mindset and hawkish Fed statements, in contrast to the dovish BoC, can keep the USD/CAD pair firmer.