USD/CAD struggles around 1.3050 as oil rebounds, Fed Powell warns for 50 bps rate hike spree

• USD/CAD is failing to establish above 1.3050 as oil prices recover Wednesday’s losses.
• Feds Powell is focusing more on price stability and warns of more than two 50 bps rate hikes this year.
• Inflationary pressures are deteriorating the paychecks of the households.

The USD/CAD pair is struggling to sustain above the crucial resistance of 1.3050 as oil prices have rebounded sharply after a mild correction. The asset has juggled in a range of 1.2922-1.3074 the whole week and is likely to display a sheer move going forward.

The odds of a spree of 50 basis point (bps) rate hike by the Federal Reserve (Fed) have strengthened. As per the interview of Fed chair Jerome Powell with Marketplace national radio program, the Fed is expected to raise interest rates by half a percentage point at each of its next two policy meetings. Also, Powell added that the Fed is prepared to do more if data turns the wrong way.

The statement clears that investors should brace for at least more than two rate hikes by 50 bps this year. The price pressures are depreciating the paychecks of the households in the US and price stability is highly needed to stabilize the economy from inflationary shocks.

On the oil front, a rebound in the oil prices after a corrective Wednesday has frozen the asset in a tight range. Lowering restrictions to contain Covid-19 in China has trimmed the fears of demand worries. The oil prices have overstepped $105.00 and are expected to advance further. A pending embargo on oil imports from Russia by Europe will keep the oil prices on edge. The US relies heavily on imports of oil from Canada, therefore higher oil prices are acting as headwinds for the asset.