Canadian Dollar holds steady amid oil uncertainties, hawkish Fed sentiment
USD/CAD steadies after three days of gains, trading around 1.4100 during Asian hours on Thursday. The USD/CAD pair has moved little as the commodity-linked Canadian Dollar (CAD) maintains its position amid cautious sentiment surrounding oil prices.
The Canadian Dollar (CAD) held steady at around 1.4100 against the US Dollar (USD) amid uncertainties surrounding oil prices and hawkish Federal Reserve (Fed) sentiment. Iranian President Masoud Pezeshkian declared Iran's stance on nuclear technology during the UN General Assembly, asserting that Tehran would not yield to threats and would continue to restrict freedom of navigation through the Strait of Hormuz.
This news reinforced the view that the Canadian Dollar may remain on the defensive as the year-end approaches due to the negative CAD seasonality in Q4. However, the USD/CAD pair could gain ground as expectations for a 25-basis-point Fed rate hike in October surged to nearly 69.7%. Several Fed officials reiterated their support for the recent rate increase and issued warnings about persistent inflation risks.
The FXS Fed Sentiment Index rose to 148.81, signaling a strong hawkish bias. The technical analysis of the USD/CAD pair shows that it is trading above both the nine- and 50-period Exponential Moving Averages, indicating a bullish bias in the near term.
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