- USD/CAD is trading in a relatively tight range on Thursday.
- US Dollar Index stages a recovery on the back of rising T-bond yields.
- WTI trades flat on the day around mid-$64.00s.
The USD/CAD pair dropped to its lowest level since February 2018 at 1.2363 on Thursday but managed to stage a rebound during the European trading hours. As of writing, the pair was posting small daily gains at 1.2415.
USD selloff wanes amid rising T-bond yields
On Wednesday, the pair came under strong bearish pressure after the FOMC’s Summary of Economic Projections reaffirmed that the majority of policymakers don’t expect a rate hike until the end of 2023. The US Dollar Index (DXY), which closed the previous three trading days in the positive territory, lost nearly 0.5% on Wednesday.
However, the sharp upsurge witnessed in the US Treasury bond yields helped USD find demand and supported USD/CAD’s recovery. At the moment, the benchmark 10-year US T-bond yield is at its highest level in nearly 14 months at 1.738%, rising 5.6% and the DXY is 0.2% at 91.60.
In the meantime, crude oil prices remain relatively quiet with the barrel of West Texas Intermediate trading little changed around $64.50 and allowing the USD’s market valuation to continue to drive USD/CAD’s movements.
Later in the session, the US Department of Labor will publish its weekly Initial Jobless Claims data. Additionally, the Canadian economic docket will feature ADP Employment Change and New Housing Price Index for February. Nevertheless, investors are likely to remain focused on US T-bond yields.
Technical levels to watch for
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