USD/CAD maintains its position above 1.3800 as Crude oil prices retreat

• USD/CAD hovers above the 1.3800 psychological level on downbeat Crude oil prices.
• WTI prices eased on concerns about diminishing demand in US and China.
• US Dollar remains tepid despite hawkish remarks from Fed Chair Powell and the uptick in US bond yields.

USD/CAD recovers recent losses registered on Friday, bidding higher around 1.3810 during the Asian session on Monday. The Canadian Dollar (CAD) received gains in the previous session on the back of improved Crude oil prices.

However, West Texas Intermediate (WTI) Crude Oil price pulls back and trades below 76.50 at the time of writing. Oil prices step back as renewed worries about diminishing demand in both the United States (US) and China cast a shadow over market sentiment. Concerns about the economic giants are putting a dent in the oil market dynamics.

The yearly decline in Chinese inflation recorded in October could potentially dampen the outlook for global growth. This has a direct impact on the demand for crude oil, given that China is a major importer of oil.

On the US Dollar (USD) side, the surprise hawkish remarks from Federal Reserve (Fed) Chair Jerome Powell failed to boost the Greenback. Powell’s concerns about the current policies not being robust enough to bring inflation down to the coveted 2.0% target seem to have left the USD in a state of limbo.

US Dollar Index (DXY) seems to be in a bit of a holding pattern, lacking a clear direction, hovering around 105.80. The index faced pressure after the release of downbeat preliminary US Michigan Consumer Sentiment data on Friday. The report showed a decline in consumer mood, falling from 63.8 in the previous month to 60.4 in November.

However, upbeat US Treasury yields could help the US Dollar to gain upward traction.  The yield on the 10-year US bond coupon stands at 4.65%, reflecting a 0.13% increase by the press time.

Traders are expected to focus on the US Consumer Price Index (CPI) scheduled to be released on Tuesday. On Canada’s docket, low-impact data events are in line such as Wholesale Sales and Industrial Product Price during the week.