USD/CAD oscillates in a narrow band
The USD/CAD pair struggles to gain any traction on Monday and seesaws between tepid gains/minor losses through the early North American session. The pair, however, manages to hold above the 1.3700 mark and is supported by a combination of factors. Crude oil prices edge lower and snap a five-day winning streak to the highest level since late August amid worries that a deeper global economic downturn will hurt fuel demand. This, in turn, undermines the commodity-linked loonie and acts as a tailwind for the USD/CAD pair amid the underlying bullish sentiment surrounding the US dollar.
In fact, the USD Index, which measures the greenback's performance against a basket of currencies - stands tall near a one-and-half-week high amid hawkish Fed expectations. Market players seem convinced that the US central bank will continue to tighten its monetary policy at a faster pace and have been pricing in another 75 bps rate hike in November. The bets were further lifted by the robust US monthly employment details released on Friday, which pointed to the resilient economy. Apart from this, concerns about a deeper global economic downturn, a further escalation in the Russia-Ukraine conflict, and fresh US-China trade jitters continue to benefit the safe-haven greenback.
That said, thin liquidity conditions in the wake of holidays in the US and Canada hold back bulls from placing aggressive bullish bets around the USD/CAD pair. Investors also prefer to wait for a fresh catalyst from this week's releases of the FOMC meeting minutes on Wednesday, which will be followed by the latest US consumer inflation figures on Thursday.
That said, thin liquidity conditions in the wake of holidays in the US and Canada hold back bulls from placing aggressive bullish bets around the USD/CAD pair. Investors also prefer to wait for a fresh catalyst from this week's releases of the FOMC meeting minutes on Wednesday, which will be followed by the latest US consumer inflation figures on Thursday.