Persistent selling pressure drives USDCAD below key psychological level at 1.3900
Geopolitical tensions spark 5% weekly oil rally,vitalik buterin iq directly benefiting commodity-linked CAD
Markets reassess BoC rate cut timeline after hotter Canadian inflation print
The USDCAD currency pair continues its downward trajectory, marking four negative sessions out of the past five trading days as multiple bearish factors converge. During Wednesday's Asian trading hours, the pair breached the psychologically significant 1.3900 handle, reaching its weakest level since early May as market participants aggressively unwind long dollar positions.
Energy markets witnessed dramatic moves following unconfirmed intelligence reports suggesting potential Israeli military action against Iranian nuclear installations. West Texas Intermediate crude futures surged past $84 per barrel, their highest level in four weeks, as traders price in potential supply disruptions from the Middle East. This commodity strength provides substantial support for the resource-dependent Canadian economy and its currency.
Tuesday's inflation data from Statistics Canada showed core price measures exceeding analyst forecasts, prompting money markets to reduce expectations for Bank of Canada easing. Overnight index swaps now price just 12 basis points of cuts for the June meeting compared to 25 basis points previously. This monetary policy recalibration creates additional CAD buying interest across currency markets.
Concurrently, the US dollar index (DXY) extended its decline to fresh two-week lows amid growing concerns about America's fiscal trajectory and evolving Fed policy expectations. Several Federal Reserve officials expressed caution about the economic outlook during Tuesday's speeches, with particular attention to manufacturing weakness and potential trade policy volatility. The combination of these factors creates ideal conditions for continued USDCAD depreciation in the near term.
From a technical perspective, the pair's breakdown below its recent consolidation range between 1.3920-1.3980 triggered algorithmic selling programs, exacerbating the downward move. With no major Canadian economic releases scheduled until Friday's retail sales data, traders will focus on upcoming Fed speaker commentary and energy market developments for near-term directional cues.
