Canadian Dollar Struggles to Rise Alongside Oil
Ed Moya | Jul 25, 2023 03:57PM ET
- Canadian dollar was fourth-worst performer in the Group-of-10 currencies.
- Oil rallies on improved global outlook and Chinese stimulus
- Gold awaits the Fed decision
Commodities and some commodity currencies caught a bid after China policymakers signaled more stimulus would soon help their struggling recovery, but that didn’t help the USD/CAD. Canada’s largest export has seen oil prices catch a bid over the past month, while the loonie has appreciated but mainly been rangebound over the past week.
It looks like FX traders are locked in with the Fed day. USD/CAD has been consolidating between the 1.3150 to 1.3250 range over the past week. If risk appetite remains in place post-FOMC decision, the Canadian dollar could make a run towards the 1.3000 level. A hawkish surprise by the Fed could support an initial above 1.3250 , with 1.34 providing short-term resistance.
h2 Oil/h2Crude Oil WTI prices are rising after the IMF raised their World GDP forecast from 2.8% to 3%. The outlook for global growth is the key for the crude demand outlook and right now it seems that might only get better as we get more stimulus out of China and as soft landing hopes grow for the US. WTI crude will likely face key resistance from the $80 level, which means the recent rally might consolidate until we get beyond the FOMC decision.
h2 Gold/h2Gold prices are wavering ahead of the FOMC decision, slightly higher on the day as the $1950 level provides key support. Gold is going to wander around for the next 24 hours as nothing else really matters except the Fed. Massive earnings might provide a key catalyst for risk-appetite, so bullion traders might want to pay attention to what happens to Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) earnings.
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