The USD/CAD pair extends its winning streak for the third consecutive session during Monday’s Asian hours, trading higher around 1.3600. The strength of the US Dollar (USD), buoyed by higher US Treasury yields, provides upward support to the USD/CAD pair.
Contributing to the upward momentum of the US Dollar is the decline in crude oil prices, which adds pressure to undermine the Canadian Dollar (CAD). As Canada is one of the largest crude oil exporters to the United States (US), the drop in West Texas Intermediate (WTI) oil prices to approximately $85.10 per barrel further weighs on the CAD.
This movement in the currency pair coincides with Israel’s withdrawal of additional troops from Southern Gaza, potentially in response to mounting international pressure. Moreover, the resumption of peace talks between Israel and Hamas in Egypt has helped alleviate tensions that previously contributed to a surge in oil prices.
The Canadian Dollar faced challenges following the release of weaker domestic employment data on Friday. Investors are now eagerly anticipating the Bank of Canada’s (BoC) interest rate decision scheduled for Wednesday, with expectations leaning towards no change from the current rate of 5.0%.
The US Dollar Index (DXY) is trading higher around 104.30 at the time of writing, propelled by a positive outcome from the Nonfarm Payrolls (NFP) report. The robust labor market performance in March, surpassing expectations, has bolstered bullish sentiment for the US Dollar.
The NFP report indicated a significant increase of 303,000 jobs in March, surpassing expectations of 200,000. However, the previous month’s growth was revised downward from 275,000 to 270,000. According to the CME FedWatch Tool, the probability of a rate cut has decreased to 46.1%. Traders are eagerly awaiting the release of US Consumer Price Index data for March, scheduled for Wednesday, which is expected to provide further insights into the direction of interest rates.