USD/CAD displays a rebound at around 1.2800 ahead of US ISM data
- USD/CAD has witnessed a modest rebound as inverts expect higher US ISM New Orders index data.
- The Canadian economy has remained flat on the GDP front.
- Oil prices are expecting more downside n accelerating recession risks.
The USD/CAD pair is getting bids around the psychological support of 1.2800 in the early Tokyo session. The asset defended the monthly support of 1.2788 on Friday and is displaying downside exhaustion signals near the critical support area. The pair has advanced to near 1.2820 in early Tokyo and more upside looks possible if the asset oversteps the critical hurdle of 1.2855.
The asset is attempting to regain its glory on higher expectations of US Institute of Supply Management (ISM) New Orders Index data, which is seen decently higher at 52 than the prior release of 49.2. A higher New Orders data indicates that the demand from consumers is robust in times of higher price pressures. Consumers have not dropped their spending, which has been upholding the recession risks ahead.
However, the critical ISM Manufacturing PMI data is expecting an underperformance as estimates dictate landing at 52 vs. the prior print of 53. A drop in the economic data may accelerate a downside move in the US dollar index (DXY).
On the loonie front, the Canadian economy reported on Friday that the economy has remained flat on the Gross Domestic Product (GDP) front. The Canadian GDP has landed at 0%, lower than the expansion of 0.3% reported last month but higher than the expectation of -0.2%.
Talking about oil, the oil prices are likely to extend their losses if the asset drops below the crucial support of $97.60. The black gold has remained in the grip of bears as recession fears are advancing sharply. Soaring price pressures in the world economy have triggered the requirement of more rate hikes ahead, which have trimmed optimism over oil prices.