USD/CAD remains biased higher around 1.3600 after paring gains
- USD/CAD trims intraday gains on risk-on sentiment on Monday.
- The decline in the Crude oil prices undermines the Canadian Dollar.
- The US Dollar strengthened as the likelihood of a Fed rate cut in June diminished.
USD/CAD extends its winning streak, trading higher around 1.3600 for the third consecutive session during the Asian hours on Monday. The US Dollar (USD) strengthens, supported by higher US Treasury yields, thereby exerting upward support to the USD/CAD pair.
Additionally, the decline in Crude oil prices contributes pressure to undermining the Canadian Dollar (CAD), given Canada is one of the largest Crude oil exporters to the United States (US). West Texas Intermediate (WTI) oil price extends losses to near $85.10 per barrel, by the press time.
This comes as Israel withdraws additional troops from Southern Gaza, likely in response to increasing international pressure. Moreover, peace talks between Israel and Hamas have resumed in Egypt, reducing tensions that previously fueled the recent surge in oil prices.
The Canadian Dollar encountered difficulties following the release of weaker domestic employment data on Friday. Investors are now anticipating the Bank of Canada’s (BoC) interest rate decision scheduled for Wednesday, with expectations of remaining unchanged at 5.0%.
The US Dollar Index (DXY) trades higher around 104.30, at the time of writing, propelled by a surprising beat from the Nonfarm Payrolls (NFP) report. The strong labor market performance in March, surpassing expectations, has bolstered the bullish sentiment for the US Dollar.
US Nonfarm Payrolls (NFP) reported a significant increase of 303,000 jobs in March, surpassing expectations of 200,000. However, the previous growth of 275,000 was revised downward to 270,000. According to the CME FedWatch Tool, the probability of a rate cut has decreased to 46.1%. Traders are awaiting the release of US Consumer Price Index data for March scheduled on Wednesday.