USD/CAD Rises as Gold Falls Amid Escalating Conflict
The USD/CAD currency pair is rising ahead of the Bank of Canada's (BoC) rate decision, which is expected to leave interest rates unchanged at 2.25%. The BoC faces a dilemma between addressing escalating trade tensions and inflationary pressures. Inflation rose 3% year-over-year in July, within the target range of 1%-3%, while oil prices continue to rise.
The market expects the Federal Reserve to hike interest rates by 25 basis points this month, with a 70% probability following Fed Chair Kevin Warsh's hawkish speech at the Jackson Hole Symposium. The U.S. dollar is gaining due to safe-haven demand and rising Treasury yields.
For USD/CAD, technical analysis suggests that buyers will look to break above key resistance levels around 1.4000 to extend gains towards 1.4080, while immediate support is at the 200 EMA around 1.3900.
In contrast, gold has fallen to a three-week low amid escalating conflict in the Middle East and rising oil prices. The precious metal faces bearish pressure from higher interest rate expectations, Treasury yields, and a stronger U.S. dollar. Technical analysis indicates that sellers will look to break below key support levels around 4,325 to extend losses towards 4,200.