The USD/CAD currency pair went down in price and moved away from the weekly high around 1.3440 on Thursday. Multiple things are putting pressure on the pair, so it trades between 1.3380 and 1.3375.

After falling for three days, crude oil prices went up due to a strong recovery in gasoline demand. OPEC and the IEA both think that the amount of crude oil used will go up later this year. This helps make up for a big rise in US crude stocks and boosts the Loonie, which is tied to commodities. The slight weakness of the US Dollar also hurts the USD/CAD pair.

The US Dollar Index (DXY), which measures the value of the US dollar against a group of other currencies, keeps falling after hitting a six-week high yesterday. This is because the yields on US Treasury bonds are falling. This, along with the optimism in the stock market, is expected to lower the demand for the dollar as a safe haven. Still, tightening Fed policy should keep US bond yields and Dollar losses to a minimum. This suggests that you should be careful before betting on the USD/CAD falling.

Due to high inflation, investors think the US central bank will keep raising interest rates. Tuesday, bets went up because of the US CPI numbers and because hawkish Fed policymakers spoke out. Even though the cost of borrowing money is going up, US monthly Retail Sales were strong on Wednesday. This should help the Fed keep being hawkish and encourage people to buy USD when it goes down.

Conclusion

People in the market are waiting for the US Producer Price Index (PPI) to come out later in the North American morning session. The Greenback will be affected by US bond yields and how people feel about risk. Traders will also look at how the price of oil changes to see what short-term USD/CAD options there are.