USD/CAD pierces 1.2700 amid a risk-off market sentiment

  • USD/CAD rises on the back of higher US yields and risk-off market sentiment.
  • The US 10-year Treasury yield reached a fresh two-month high at 1.567%.
  • The fall in oil prices weighs on the USD/CAD.
  • US Consumer Confidence drops for the third consecutive month.

As the American session kicks in, the USD/CAD is trading at 1.2700, up 0.59% at the time of writing. The market sentiment is downbeat, with global stocks recording losses in the prospects of central banks worldwide, looking forward to reducing the pandemic stimulus programs implemented since March of 2020.

Additional pressure in the market sentiment is the passing of the spending bill and the suspension of the debt ceiling in the US. Failure to pass the bill will dry out the Treasury, which could cause the run out of money of the US government between the second half of October or nearly November.

The 10-year benchmark yield rose eight basis points (bps) reached a new high of 1.567%, underpinning the US Dollar Index, which tracks the buck’s performance against six rivals, up 0.36%, currently at 93.75.

Western Intermediate Texas (WTI) is down some 0.70%, trading at $74.74, exerting upward pressure on the USD/CAD pair.

US Consumer Confidence slide for the third straight month

Meanwhile, the Conference Board released the Consumer Confidence reading, which fell for the third consecutive month down to 109.3 from August’s 115.2.  “Consumer confidence dropped in September as the spread of the Delta variant continued to dampen optimism,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

According to the report, spending intentions for homes, autos, and appliances retreated again. Franco added, “These back-to-back declines suggest that consumers have grown more cautious and are likely to curtain spending forward.”

Home prices surged 19.9% in July, as reported by S&P Global, a tick lower than the 20% foreseen by economists.

In the meantime, the Secretary of Treasure Janet Yelland and Federal Reserve Chairman Jerome Powell are testifying before Congress on the CARES Act. You can follow the coverage here.