- A subdued Oil demand undermined Loonie and helped gain follow-through traction.
- A free-fall in the US bond yields weighed on the USD and kept a lid on any strong gains.
The USD/CAD pair held on to its mildly positive tone through the early European session, albeit has retreated around 25-30 pips from seven-week tops set earlier this Wednesday.
The pair continued gaining traction for the second consecutive session and added to the previous session’s strong up-move of over 100-pips from sub-1.3200 level. Fears of a full-blown US-China trade and currency war recedes mildly on Tuesday after the PBOC took steps to contain the ongoing slide in the Yuan. The move led to some stability in the global financial markets and triggered a goodish intraday bounce in the US Treasury bond yields, which eventually extended some support to the US Dollar and prompted some aggressive short-covering move.
The positive momentum extended through the early part of Wednesday’s trading action – lifting the pair further beyond the 1.3300 round figure mark on the back of a subdued action in Crude Oil prices, which undermined demand for the commodity-linked currency – Loonie. Oil prices were weighed down by concerns over a significant drop in the demand growth amid the recent escalation in the US-China trade tension, which could have a harsher impact on the global economy and lead to a surplus situation in 2020.
However, a fresh leg of a free-fall in the US Treasury bond yields exerted some renewed downward pressure on the greenback and turned out to be the only factor that failed to assist the pair to build on the bullish move. Hence, it will now be interesting to see if bulls able to capitalize on the momentum or opt to take some profits off the table, especially after the recent up-move of over 200-pips from the pre-FOMC swing lows to the 1.3100 neighbourhood and absent relevant market-moving economic releases – either from the US or Canada.
Meanwhile, a scheduled speech by Chicago Fed President Charles Evans might influence the USD price dynamics, which along with the broader market sentiment surrounding Oil prices might further collaborate towards producing some short-term trading opportunities later during the early North-American session.
Technical levels to watch
Share
