The Loonie pair is hovering around 1.2860 after a slight correction from the critical line of 1.2880 in the early Tokyo session. Earlier, the asset rebounded firmly after hitting a low of 1.2820 on Tuesday. The major picked bids amid a firmer rebound in the US dollar index.
The US dollar indexis attempting to pass the current hurdle of 104.50 backed by higher expectations of extreme hawkish comments from Federal Reserve chair Jerome Powell in his speech. The Fed has already raised its interest rates to 1.50-1.75% along with the balance sheet reduction program, however, their impact has not been reflected yet on the inflation rate. Therefore, a consecutive rate hike by 75 basis points (bps) is expected to be discussed in his speech.
Oil prices have established themselves comfortably above the psychological resistance of $110. The market participants are worried about the supply constraints as it won’t be a cakewalk to substitute Russian oil with any other exporter. It is worth noting that Canada is the largest producer of oil to the US, therefore higher oil prices fetch higher funds for the Canadian economy.
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