Boosted by rising oil prices and a weaker US dollar, the Canadian dollar stood strong on Wednesday, hitting a 4.5-month high in the prior session.
The Canadian dollar was on a solid footing Wednesday after recording a fresh high in 4.5 months in the previous session thanks to increasing oil prices and a weaker US dollar.
Oil prices rose more than a dollar a barrel on Tuesday and the US announced the creation of a task force to safeguard Red Sea routes from attacks by Houthi militants.
Though the attacks on shipping have boosted the risk premium, some analysts said impacts to oil supply are currently limited. Firms can reroute vessels at higher transport costs.
The US dollar edged higher after the BOJ kept rates on hold as expected. The 10-year Treasury yields still traded below 4%, indicating that the rally could hardly be sustained.
Investors reduced bets on the BOC shifting to interest rate cuts in the coming months after domestic data showed inflation unexpectedly holding steady in November. But easing as soon as April is still expected.
The CPI remained at 3.1% in Nov, surprising analysts who had forecast inflation would ease to 2.9%. Prices for travel tours surged 26.1% year-over-year and food prices remained sticky.
The 200 SMA near 1.35 is in place to form negative pressure. In the short term, we see more gains for the USD/CAD given RSI below 30 and oil prices approaching resistance level.
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