On Monday, the USD/CAD pair adds to the gains it made on Friday. On the other hand, spot prices lose some of the profits they made during the day to reach a high for the week and drop back below the mid-1.3400s during the early European session.

Investors are worried that China’s worsening COVID-19 scenario could hurt fuel consumption in the country that imports the most crude oil. Crude Oil prices dropped to a new low for the year, which broke the Loonie, which is tied to commodities. The USD/CAD pair is helped by how cautious people are and how strong the US Dollar is.

China’s protests against the zero-COVID policy make people worry about worsening the economic slowdown and make investors less interested in riskier assets. It is clear from the fact that the stock market as a whole is getting weaker, making people look to the USD as a haven. But the Greenback can’t go up because US Treasury bond yields are decreasing.

US bond yields keep decreasing because people worldwide are moving to safer places, and the Fed is not tightening policy as quickly as it used to. A “dovish” analysis of the November FOMC meeting minutes released last week confirmed market expectations for a relatively low 50-bps lift-off at the next FOMC policy meeting in December.

It limits USD bullish wagers and USD/CAD gains, at least for now. Spot prices are down about 40 pips from their daily high, but they are still above 1.3400 as traders wait for FOMC speakers to find out about short-term opportunities.

Conclusion

Moving on, USD/CAD traders may be interested in second-tier US employment data, but they should focus on risk triggers and the US and Canadian job reports for November.