Dropping Oil Prices Bolster the Greenback

All Eyes on Fed Policy as Safe Haven Investments Increase

As sliding crude oil prices provide a much-needed boost to the US dollar, the greenback solidifies its firm stance against the Loonie. Indeed, the USD/CAD pair moves higher as US benchmark yields extend more gains ahead of key US inflation data. The US 10-year yield increased 2.76% reaching its highest level in 3 years.

Meanwhile, gold and silver strengthened their positions as safe-haven investments due to the prolonged war in Ukraine and the scaling of sanctions on Russia by the European Union.

Lockdown in China Behind Oil Price Drop

Crude oil prices dropped to their lowest level since mid-March bolstering the US dollar and putting pressure on the commodity-linked Canadian dollar. Behind the price drop, renewed and extreme lockdown in mainland China as Covid-19 cases rise to a new high.

As such, the focus of the week remains on the March CPI scheduled for release on Wednesday. Investors and experts are expecting an increase of 8.4% in comparison to last month’s 7.9%. All eyes are on the Federal Reserve’s next move and its plans to enable a hawkish monetary policy that would tighten the rise in inflation.

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