USD/CAD seesaws around 1.3110s, post-Powell speech

• The Loonie weakened after Powell’s speech reiterated the Fed’s commitment to tackling inflation.
• Unemployment claims in the US decelerated, fueling estimations that the labor market remains tight.
• Even though the BoC and Fed are tightening at the same pace, the safe-haven status of the US dollar will keep the USD/CAD under buying pressure.

The USD/CAD trims some of its Wednesday losses, climbing towards the 1.3100 area amidst a risk-on impulse, with most European and US equities rallying, despite further central bank tightening monetary conditions, with the ECB hiking 75 bps.

During the overnight session, the USD/CAD began trading near the 1.3110s area and wobbled around the 1.3100-1,3140 range before reaching the day’s highs at 1.3159. Nevertheless, it erased those gains and is currently trading at 1.3118, above its opening price by 0.01%.

USD/CAD advances modestly after hawkish Powell speech

Sentiment-wise, the market is slightly tilted positive. The Federal Reserve Chair, Jerome Powell, reiterated the Fed is “strongly committed” to taming inflation. The market’s reacted, sending the greenback higher, while the US 2-year yield, the most sensitive to interest rate increases, climbed.

In the meantime, the US Department of Labor reported that Initial Jobless Claims for the week ending on September 3 decelerated to 222K, less than estimates of 240K by street analysts. Sources cited by Reuters commented that “Nothing in these data suggest the economy is softening further, still less that it is in recession.”

In the meantime, the US Dollar Index, a gauge of the buck’s value vs. a basket of currencies, gains 0.36%, up at 109.924, approaching the 110.000 psychological barriers, a tailwind for the USD/CAD. Meanwhile, US crude oil, also known as WTI, recovers some ground at $83.28 per barrel, up 1.08%, putting a lid on USD/CAD gains.

Additionally, market players digest the recent interest rate hike by the Bank of Canada (BoC) on Wednesday. Although the BoC sounded hawkish and prepared market players, the broad safe-haven status of the greenback, and further rate hikes by the Federal Reserve, could keep the USD/CAD under upside pressure.

USD/CAD Key Technical Levels