USD\/CAD hovers near 1.3700 after a two-day increase, bolstered by risk aversion due to concerns about an AI bubble. The decline in Oil prices is affecting the Canadian Dollar, which is sensitive to commodities.<\/p>\n
The US Dollar rises for the second day against the Canadian Dollar. Trading at 1.3685, the USD benefits from a cautious market mood despite earlier failing to surpass 1.3700.<\/p>\n
Disappointing earnings from US tech giants like Google’s Alphabet weigh on equity markets worldwide. European markets experience moderate losses, and Wall Street futures indicate a mixed opening.<\/p>\n
Recently released US data offers mixed results. The ISM Services PMI shows strong business activity, but concerns about the labour market surface with poor employment figures from the ADP report. Thursday’s Jobless Claims and JOLTS Job Openings data will be closely monitored.<\/p>\n
Canada faces a light economic docket with falling Oil prices impacting the Canadian Dollar. US WTI crude prices rose slightly from weekly lows but remained over $2 below last week’s highs, influenced by de-escalating US-Iran tensions. <\/p>\n
In financial markets, “risk-on” suggests optimism with commodity-exporting currencies strengthening. Conversely, “risk-off” favours safe-haven currencies like the US Dollar, Japanese Yen, and Swiss Franc.<\/p>\n
We should recall that around this time last year, in early 2025, there was a significant risk-off mood pushing USD\/CAD towards the 1.3700 level. This was driven by fears of an AI-led tech bubble and disappointing earnings from major firms. The US dollar strengthened as a safe-haven asset, while the Canadian dollar was weighed down by falling oil prices.<\/p>\n
The situation has changed considerably since those fears in early 2025. The tech sector demonstrated resilience, with the NASDAQ 100 ultimately recovering from that dip to finish last year with gains over 20%. Current market volatility, as measured by the VIX index, is now trading near 14, suggesting much less investor anxiety than we saw during the peak fear of last year.<\/p>\n
Furthermore, the headwinds for the Canadian dollar have eased. WTI crude oil prices have recovered from the sub-$66 levels seen during that period of tension in early 2025 and are now holding firm above $80 per barrel, supported by solid global demand projections for 2026. This provides a much stronger fundamental underpinning for the loonie.<\/p>\n
The outlook for the US dollar has also shifted, as the Federal Reserve initiated two small rate cuts in the latter half of 2025 as inflation cooled. This monetary policy pivot has reduced the dollar’s yield advantage over other currencies, including the CAD. US Jobless Claims have also trended slightly higher in recent months, with the latest figures showing a four-week average of 225,000, indicating a softening labor market.<\/p>\n
Given these developments, we should view any rallies in USD\/CAD as opportunities to position for Canadian dollar strength. The fundamental drivers that pushed the pair to 1.3700 last year have largely reversed. We could consider buying CAD calls or using put spreads on USD\/CAD to capitalize on a potential move lower, as the risk-reward is no longer skewed to the upside.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD nears 1.3700 as risk aversion and falling oil prices pressure Canadian Dollar; US Dollar gains.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41034","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/41034","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=41034"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/41034\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=41034"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=41034"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=41034"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}