The USD/CAD pair is holding steady at around 1.3470 as the European session begins on Tuesday, following a cautious start to the week. The mixed sentiment is aptly reflected by the Loonie pair, with traders showing caution ahead of top-tier US and Canadian data/events.
There are mixed views surrounding US policymakers’ readiness to avoid the debt ceiling expiration, causing global markets to turn cautious. President Joe Biden and House Speaker Kevin McCarthy are bracing for key negotiations scheduled at 19:00 GMT.
However, comments from McCarthy indicate that the US Dollar price has been supported, as fears of deadlock on the US debt ceiling extension loom.
The US Dollar Index (DXY) is dropping to 102.40, continuing its week-start pullback from the monthly high.
Meanwhile, WTI crude oil is retreating from an intraday high to $71.40 amid mixed clues from the US Energy Information Administration’s latest Oil report, the US readiness to refill the Strategic Petroleum Reserve (SPR), and fears of supply crunch due to a wildfire in Canada’s Alberta, one of the key global oil producers.
Yesterday, downbeat US data and firmer Canadian statistics, along with an upbeat crude oil price, underpinned the USD/CAD pair’s biggest daily slump in over a week.
The NY Empire State Manufacturing Index marked the biggest fall since April 2020, while Canada’s Housing Starts for April and Wholesale Sales for March rose past market forecasts and priors.
The S&P 500 Futures are printing mild losses, despite Wall Street closing positive, and yields remain pressured, showing the market’s indecision and its wait for crucial data/events for clear directions.
Canada’s Consumer Price Index (CPI) and the Bank of Canada (BoC) CPI Core for April, along with the US Retail Sales for the same month, will be key data to watch for USD/CAD traders for clear directions. Traders should also pay attention to how US policymakers tackle default fears for a better guide.
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