USD/CAD retreats as sellers step in on high oil prices

The USD/CAD pair slid almost 0.80% on Monday on a risk-on mood, soft US dollar, and elevated oil prices. Last week’s US inflation data, mainly core-CPI, eased worries of a Fed 100 bps rate hike, as most policymakers pushed back against it.

Canada’s inflation and retail sales would shed some light, on the BoC’s forward path, after the BoC jumbo hike.

The USD/CAD slides for the second straight day, erasing last Thursday’s gains, and is back below last week’s low at 1.2936, due in part to a softer US dollar. The DXY has retraced from 108.000, almost 1%, amidst an upbeat market mood, cheered on speculation that the Fed would not tighten as aggressively as previously expected.

Therefore, the USD/CAD is trading at 1.2924, having fallen below the 1.3000 mark and the 200-hour simple moving average (SMA) to hit a daily low at 1.2898. The pair could test July’s lows at 1.2837 on a week of a light US calendar and as Fed speakers entered the blackout period.