USD/CAD inter-markets: room for the rebound to extend further?

USD/CAD has managed to retake the key 1.2800 mark so far and is currently reverting two consecutive sessions with losses after the failed attempt to clinch the 1.3100 mark during last week.

A solid performance of the US Money markets is giving extra wings to the greenback so far today, with yields of the 2-year, 5-year and 10-year trading in session highs. In the same direction, the US Dollar Index (DXY) has reclaimed the 94.00 mark and above after bottoming out in the mid-93.00s on Monday.

Collaborating with today’s price action, a renewed softer tone in crude oil prices saw the West Texas Intermediate slipping below the $49.00 mark per barrel earlier in the European session, all adding to the current offered bias in CAD.

Spot will remain well exposed to risk-on/risk-off trends in the hours prior to the UK-EU Referendum (Thursday), remaining to the mercy of the upcoming poll results, which keep showing the final outcome will be a very (very) close call. Once the event has passed, USD/CAD should return to ‘normalcy’, with price action determined by US-CA divergence in monetary policy and crude oil dynamics.