“¢ Overnight slump in oil prices weighed on Loonie and helped the pair to bounce off lows.
“¢ Today’s modest uptick supported by some renewed pickup in the US bond yields.
“¢ Persistent USD selling might now keep a lid on any further strong up-move.
The USD/CAD pair traded with a mild positive bias through the early European session and is currently holding with modest daily gains, just above mid-1.2900s.
The pair on Wednesday rallied nearly 100-pips from an intraday low level of 1.2857 amid a slump in crude oil prices, which weighed heavily on the commodity-linked currency – Loonie. In fact, WTI crude oil fell to near 2-month lows, below $65.00/barrel mark after the latest EIA report showed an unexpected build in the US crude oil stockpiles.
With oil prices recovering some of the overnight lost ground, a modest uptick in the US Treasury bond yields assisted the pair to build on overnight sharp rebound from one-week lows. The benchmark US 10-year bond yield has now moved back closer to the 3.0% psychological level and remained supportive of the pair’s steady climb on Thursday.
However, the US Dollar bearish pressure remains unabated and might now turn out to be the only factor keeping a lid on any meaningful up-move ahead of today’s release of the BOC Financial System Review and the BOC Governor Stephen Poloz’s scheduled speech.
Technical levels to watch
A strong follow-through buying has the potential to continue lifting the pair further towards reclaiming the key 1.30 psychological mark en-route an ascending trend-line resistance, currently near the 1.3065 region.
On the flip side, 1.2925 level now seems to protect the immediate downside and is followed by the 1.2900 handle, below which the pair could slide back towards retesting 50-day SMA support near the 1.2855-50 region.
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