USD/CAD sees bids near 1.3500 on a risk aversion theme, as oil looks to retake $80.00

After slipping to about 1.3500 in the early Asian session, the USD/CAD pair has gained purchasing activity. The Canadian currency has risen as the risk-aversion theme takes pace over the tumultuous holiday week. After exhibiting a significant decrease on Tuesday, the major currency has shown signs of recovery as rising oil prices have boosted the Canadian Dollar.

Due to the absence of trustworthy triggers for decisive currency market changes, the risk profile is highly uncertain. In addition, the market sentiment was unaffected by China's decision to loosen restrictions on outbound tourists. On Tuesday, the S&P 500 remained under pressure as tech-savvy corporations under significant heat. The US Dollar Index (DXY) has gone flat near 103.80 after failing to surpass the crucial 104.00 resistance level.

In the meantime, the US Treasury bonds are affected by the risk aversion theme triggered by illiquid markets due to the holiday week. The yields on 10-year US Treasuries have increased to roughly 3.85%.

The Canadian Dollar hogged the focus on rising oil prices. West Texas Intermediate (WTI) futures have dipped little but have continued their upside trajectory and are forecast to recapture the critical resistance of $80.00 led by rising supply worries and China’s progress towards reopening of the economy despite a surge in Covid cases.

After Russian President Vladimir Putin signed an order restricting the sale of Russian oil to countries that implemented the oil price ceiling, supply concerns intensified.

Thomas M. Mertens, a researcher from the Economic Research Department of the Federal Reserve (Fed) Bank of San Francisco, created a recession predictor based on macroeconomic time series, especially the unemployed unemployment rate. He claimed that no forecasts today predict an approaching recession in the following two quarters. Moreover, the unemployment rate does not yet signal an imminent recession.