USD/CAD Refreshes YTD Peak, Surpasses 1.3500 Amid Siding Oil Prices And Stronger USD

The USD/CAD pair is prolonging the weekly uptrend and gaining strong follow-through traction for the fourth day on Friday. The momentum remains uninterrupted through the early part of the European session and lifts spot prices to levels beyond the 1.3500 psychological mark, or its highest level since January 6.

Crude oil prices extend this week’s rejection slide from the 100-day SMA and remain depressed for the fifth straight day, hitting over a one-week low. Investors seem worried that rapidly rising borrowing costs will dampen economic growth and dent fuel demand.

This, in turn, weighs on the black liquid, undermining the commodity-linked Loonie. Broad-based US Dollar strength provides a good lift to the USD/CAD pair.

The USD Index, which tracks the Greenback against a basket of currencies, touches a new six-week peak amid expectations for further policy tightening by the Fed. The markets seem convinced that the US central bank will stick to its hawkish stance and have been pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May.

This pushes the benchmark 10-year US government bond yield to its highest level since late December and boosts the USD. Apart from this, a fresh leg down in the global equity markets – amid looming recession risks – further benefits the safe-haven buck.

The USD/CAD pair’s rally could be attributed to some technical buying following the overnight breakout over a two-month-old descending channel. A subsequent move above the 1.3470-1.3475 region and the 1.3500 mark could be a new trigger for bullish traders. This might have already set the stage for a further appreciative move.

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